In a communiqué published on 8 March, the Chamber of Commerce stated that, although it understands the ESRB’s concerns, the situation should not be exaggerated, but dealt with in a constrained and proportionate manner. Above all the chamber believes that over-regulation should be avoided in order to prevent damaging the economy in general, and the financial and construction sectors in particular.

In this regard Luxembourg authorities tabled a bill last year aimed at regulating the systemic risk of the property sector by providing the CSSF, the financial regulatory agency, with new control tools, which would regulate the provision of property loans.

The Chamber of Commerce reminded the ESRB of Luxembourg’s “shock-resistant credit institutions”, which have some of the highest credit ratios in Europe. “It is important not to exaggerate their potential vulnerability to possible shocks in the Luxembourg real estate market.”

Recent studies demonstrate that the sustained rise in real estate prices in Luxembourg reflects factors such as strong net immigration and resulting housing deficit. Therefore, the Chamber of Commerce stated that priority should be given to the structural determinants of the imbalance between housing supply and demand in Luxembourg.