The Luxembourg housing market experienced growth in the number of transactions on a quarterly basis, but a closer look reveals mixed results. Photo: Guy Wolff / Maison Moderne

The Luxembourg housing market experienced growth in the number of transactions on a quarterly basis, but a closer look reveals mixed results. Photo: Guy Wolff / Maison Moderne

In Q3 2024, Luxembourg’s housing market saw a 6% increase in existing apartment sales and a 16% rise in independent homes compared to the previous quarter. However, transactions for future constructions declined by 6%, suggesting that the market recovery is not uniform across all sectors.

Luxembourg’s residential property market showed further signs of recovery in Q3 2024, with an ongoing increase in sales of both houses and apartments for last four quarters, data from the housing ministry’s housing observatory and the Luxembourg Central Bank (BCL) shows.

Sales

According to data from the housing observatory, 664 houses and 1,139 apartments were sold in the third quarter of 2024, up from 570 houses and 1,065 apartments in the previous quarter. However, the number of sales for apartments under construction remained subdued, with only 144 sales deeds registered in Q3 2024, down from 154 in Q2.

One possible explanation for this trend is the substantial price gap between new and existing apartments. In Q3 2024, the average sales price for apartments under construction was €9,309 per square metre, nearly 21% higher than the average price of existing apartments, which was €7,703 per square metre. This marks a significant increase compared to a price difference of just 7.7% in 2022. The housing observatory does not provide average price data for detached houses.

Data from the Registration Duties, Estates and VAT Authority (AED) reveals a striking contrast in the Luxembourg property market in Q3 2024. The average sale price of an apartment under construction reached €869,200--an eye-watering 47% more than the €589,500 paid for existing apartments. This significant price gap makes ready-to-move-in apartments increasingly appealing to buyers. Meanwhile, detached houses saw a notable uptick, with their average selling price climbing to €1m, reflecting an 11% increase compared to Q2 2024.

Loans

While sales volumes continued to rise, the total value of housing loans issued for residential properties in Luxembourg saw a slight decline, falling from €1.252bn in Q2 to €1.219bn--a 1% drop, data from the BCL shows. This dip suggests that banks are becoming more cautious, carefully assessing potential homebuyers’ ability to meet mortgage obligations and minimise the risk of defaults. As a result, average loan amounts also shifted: the typical loan for an apartment fell by nearly 14% to €331,400, while average home loans saw a 10% increase, rising to €534,800.

Building permits

Despite a slight increase in the number of building permits issued in Q3 compared to the previous quarter, the construction sector remains cautious about the future. The number of permits is still well below historical averages, suggesting that there may not be a strong pipeline of new projects in the coming months.

The construction sector thus faces challenges, with uncertain price developments ahead and potentially weak inventory for new builds.

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