Analysis report 10 has been published by the housing observatory, a department under Luxembourg’s housing ministry. It provides an analytical look at market trends, sales prices and rents in the first quarter of 2024. Here’s a summary of three main takeaways:

1. Sales still weak

The residential market is still weak in terms of transactions, particularly for new builds. Activity is still at a much lower level than it was before the property crisis, i.e., at the end of 2022. Only 92 sales were made in the first quarter of 2024, which is 47.1% fewer than in the first quarter of 2023 and seven times fewer than the average for previous years (between 2017 and 2022).

This reduction in the volume of transactions for apartments under construction has not yet been offset by purchases by the state or the city of Luxembourg, both of which have announced purchases of construction projects from private developers.

It should be noted, however, that sales of existing flats have picked up slightly: +24.5% compared with the first quarter of 2023, although activity remains below the average for the years preceding the crisis.

2. Prices stabilising

The hedonic sales price index provided by the country’s statistics bureau Statec for existing homes and homes under construction shows that prices are now tending to stabilise. There was only a -0.3% change between the fourth quarter of 2023 and the first quarter of 2024, following a 10.9% fall between the first quarter of 2023 and the first quarter of 2024.

This slowdown affects both apartments and existing homes, with the latter segment losing the most in recent months (-14.7% compared with the first quarter of 2023).

On the other hand, sales prices for flats under construction (Vefa), which have been the least affected by the fall in prices, are down this quarter (-2.3% compared with the fourth quarter of 2023). However, trends in this segment are currently highly volatile, as the number of transactions is very limited. In this segment, it is still an adjustment by activity volumes that dominates, rather than an adjustment by prices.

3. Rents stabilising

After rising sharply for several quarters, particularly in the first quarter of 2022 and the first quarter of 2023, advertised rents for apartments (i.e., for new leases) have stabilised since the second quarter of 2023.

However, the increase over the last 12 months has been contained, at just +1.5% between the first quarter of 2023 and the first quarter of 2024, which is still lower than the rise in consumer prices measured by the NICP (+3.2%) over the same period. This can be explained by tenants’ inability to absorb the sharp increases in rents demanded by landlords, despite rising rental demand.

There is one exception: rents for furnished rooms--which currently account for 15% of the total rental supply--have risen by 4.5% compared with the first quarter of 2023. This is well above the rate of inflation for consumer goods.

This article was first published in French on . It has been translated and edited for Delano