Luxembourg's Ministry of Housing and Spatial Planning has announced the publication of a new report (Note 37) providing an overview of real estate transactions between 2007 and 2023.
The ministry noted that the Housing Observatory's analyses of real estate transactions are based on the land registration file, managed and transmitted by the Registration Duties, Estates and VAT Authority. This file contains information from notarial deeds and therefore makes it possible to closely follow developments in the real estate and land markets in Luxembourg.
The statistical use of this file involves the exclusion of transactions whose non-standardised data risks biasing the analyses. This method of selecting transactions was agreed upon in 2013 by a consortium including the Registration Duties, Estates and VAT Authority, STATEC, the Banque Centrale du Luxembourg and LISER.
As such, only part of the 243,566 real estate and land transactions which were recorded in Luxembourg between 2007 and 2023 are found in the apartment price indices (existing and under construction) calculated jointly by STATEC and the Housing Observatory, in the STATEC house price index, as well as in the land price index of the Housing Observatory.
The total financial volume associated with these 243,566 transactions was around €115 billion over the entire period. Purely residential transactions (houses, existing apartments and those under construction) represented 70% of this total financial volume - a share which remained relatively stable over the period 2007-2023, despite a significant decrease in the financial volume linked to apartments under construction from 2021. Land transactions represented approximately 15% of the total financial volume over the entire period and offices, shops and other types of buildings represented approximately 11% of this volume. The remaining 3% consists of transactions comprising several different types of goods.
Note 37 of the Housing Observatory also analysed, for the first time, transactions excluded from the scope of these price indices, and drew three main conclusions:
- Price indices were calculated using transactions representing a maximum of 73% of the total financial volume of €115 billion from 2007-2023. Excluded from the scope of price statistics: transactions of non-residential buildings, transactions combining several types of property, transactions of land and houses not included in price indices, as well as atypical existing and under construction apartment transactions. The ministry said it was therefore important to look at the "grey areas" not considered in the price indices which represent a significant part of activity in the real estate and land markets;
- The analyses carried out on the excluded transactions made it possible to identify "normal" sales, but whose encoding was atypical. These could be reintegrated into apartment price indices. More generally, this exercise showed that the quality of statistics depends primarily on the quality of the data used. While some aspects tend to improve, such as the proportion of existing apartments sold without indication of surface area, others remained at problematic levels. This is particularly the case for the many VEFA (under construction) apartment transactions for which it is not possible to link the transaction concerning the "land" part and that concerning the "constructions" part. The provision of new information would significantly improve the quality of price statistics, according to the ministry;
- A significant portion of transactions excluded from the scope of price indices can be used to analyse the characteristics of sellers and buyers of real estate and land. These are transactions with long leases, transactions including shared lots, multiple transactions, transactions with missing surface area (existing apartments), transactions with missing information on the land share (apartments under construction), etc. Using as many transactions as possible would allow for a global view of the evolution of the profiles of participants in real estate and land transactions in the country. For example, statistics on the acquisition of apartments under construction by investors currently only consider transactions including a single apartment with a normal VAT rate, thus neglecting the numerous purchases of several of these apartments at the same time.
The ministry concluded that the analyses of Note 37 of the Housing Observatory make it possible to better understand the real estate and land markets as a whole, and thus lay the first milestones for future studies on the characteristics of the actors involved in transactions.
