How does Luxembourg compare with its neighbours when it comes to housing? The Liser Housing Observatory has carried out a comparative analysis of the four countries in the Greater Region. They “present distinct housing dynamics due to their demographic, economic and political contexts,” notes the Observatoire de l’habitat. Detailed prices show that Luxembourg continues to exert pressure on border areas.

House prices are highest there, particularly “in the capital and nearby municipalities, where they exceed €10,000 per square metre and gradually fall as you move away from the city,” notes the report. In Strassen, for example, prices can reach €10,239 euros per square, while in Echternach they are around €5,529 per square metre. This is due to the high demand for housing, fuelled by population growth and the influx of cross-border commuters. It is also due to the limited supply and high cost of land.

In France, at national level, prices are lower, although the report mentions, for example, an average of €1,794 per square metre for flats in Lorraine, which can exceed €3,500 per square metre near the border. In Germany, where prices are even cheaper at national level, the same trend can be observed, with border towns such as Palzem and Perl recording prices above the average for their regions.

“Despite a fall in sales prices in Luxembourg, the property market there is still under pressure,” says the report. This continues to generate tensions in the Belgian, French and German border areas, “where more and more local residents and new arrivals are facing housing affordability problems. Growing demand, fuelled by cross-border workers and proximity to Luxembourg, is pushing up prices in these regions, accentuating disparities and making housing less affordable for local residents.”

But the cost of housing is not just a question of the price of housing, and also takes into account other factors such as the type of tenure, the household’s standard of living and in particular the affordability ratio, a key indicator. It measures the weight of housing in a household’s budget. A high affordability ratio may indicate that the household is in a precarious and financially vulnerable situation.

Tenants: the highest affordability ratio in Belgium

If we take this indicator, the ranking changes completely. For tenants, Belgium has the highest affordability ratio (40.4%), higher than France (35.7%), Luxembourg (35%) and Germany (27.6%). In Belgium’s case, this is due to the high proportion of homeowners and the limited availability of social housing. The most vulnerable households are therefore turning to the rental market, where rents are higher.

Germany stands out if we look at homeowners (with a mortgage). It is the only country where the affordability ratio is higher for homeowners. In the other three countries, “the situation is alarming, particularly in France and Belgium, where tenants on the private market have much higher affordability ratios than owners with a mortgage,” the report points out. For the latter, the affordability ratio is around 30% in Germany, 28.7% in France and 28.3% in Belgium. In Luxembourg, it is similar to that for tenants, at around 35%.

The demographic profile of residents, in particular their age, family situation and housing tenure, has a direct impact on the cost of housing and the affordability ratio. “Homeowners without mortgages appear to be the oldest in all four countries. Conversely, homeowners with a loan are generally younger on average (42.6 years old in Luxembourg, 43.9 in France and 44.7 in Belgium), except in Germany,” says the report.

“In both 2012 and 2022, Luxembourg, Belgium and France will have a high proportion of owner-occupied households, reaching 69.9%, 67% and 60.5% respectively in 2022. In Luxembourg and Belgium, homeowners are split almost equally between those with and without a loan, while in France, homeowners without a loan outnumber those with a loan by a factor of 1.6,” says the Observatoire de l'habitat.

Germany differs from its neighbours in having a significantly higher proportion of tenants, unlike the other three countries in the Greater Region. This is due to a number of specific historical features, according to the report. “Germany is also notable for its large co-operative sector of workers’ rental housing, the legal framework for which was established in 1889.” The country also adopted a law on the protection of tenants in 1914, as well as “policies focused, among other things, on regulating the rental market, controlling rents and promoting the construction of affordable housing.”

The most spacious homes in Belgium

According to the report, “if we compare the size of dwellings with the size of households, we find that Belgian households occupy the most spacious dwellings on average, closely followed by those in Luxembourg. For example, in 2022, homeowners without a mortgage in Luxembourg and Belgium lived in homes with an average of 5.1 and 4.9 rooms respectively, while their German counterparts had one room less on average (4.3 rooms). When these figures are expressed in terms of the number of people per household, the difference diminishes somewhat, but remains to the advantage of people in Luxembourg and in Belgium.”

This article was originally published in .