Prices of houses for sale in Luxembourg fell sharply throughout 2023, but this situation could reverse over time.
According to the most recent Housing Observatory and Statec report on the real estate sector, property prices, including existing and under-construction homes, fell 14.4% between the fourth quarter of 2022 and the fourth quarter of 2023, with variations in the different segments – they fell by 7.6% in apartments under construction, 14.5% in apartments already built and 18.8% in built houses.
However, despite the downward trend seen, the International Monetary Fund (IMF) warns of the risk of property prices rising again due to the Government’s housing policies.
The measures announced by the Executive to support the construction sector in crisis and the Luxembourg real estate market, which include tax incentives for private investors and support for families to purchase a home, are “likely” to drive up prices, resulting in a greater household debt and less affordable housing, said the IMF in an annual assessment released on Tuesday and reported by the Luxembourg Times.
“These measures could help restore confidence and alleviate pressure on the construction sector. However, given the restrictions on supply, it is likely that the increase in demand will result in a further deterioration in household debt and affordability”, stated the organization, which also considers that the Government’s intervention should “allow an orderly adjustment of the prices of housing”, which, despite the decline in 2023, are “still overvalued”.
Price decline slowed at the end of the year
In the analysis of recent quarters, there is already a slowdown in declines. “The drop recorded in the last quarter of 2023 is less significant than that of the previous quarter”, says information from the Housing Observatory and Statec.
In practice, this translated into practically unchanged prices (-0.2%) for apartments under construction, while those for built apartments fell 3.9% in quarterly terms. In housing, the fall also slowed down: after a drop of 8.6% in the third quarter, the drop in prices for homes already built was just 1.7% in the fourth quarter of 2023, the report points out.
