Following a in housing loans and number of transactions during the last quarter of 2024, new loan volumes for house purchases saw a decline in and February 2025. This decline points to a potential slowdown in the Luxembourg housing market at the start of the year. However, full quarterly housing transaction data for Q1 2025 will not be available until June from the national statistics bureau, Statec, providing a more comprehensive view of the trend.
Loan volumes
The aggregate housing loan figures compiled by the Luxembourg Central Bank, derived from 73 reporting banks, reveal a slight decline in the cumulative housing loan volume. It dropped from €41.47bn in December 2024 to €41.22bn in January 2025, and further to €41.16bn in February 2025. This continued decrease suggests that homeowners are repaying their mortgages more quickly than they are taking out new loans, signalling a possible deceleration in housing market activity.
It’s important to note that the figures published by the BCL provide a preliminary snapshot of the housing market activity. The quarterly housing sales data, which is more comprehensive, will not be released until June 2025, offering a clearer picture of the housing market dynamics.
Consumer behavior
One of the notable shifts in early 2025 is the increase in household deposits rather than loans. In the first two months of the year, Luxembourg households added €131m to their bank accounts, suggesting a preference for saving rather than borrowing at this stage. This reflects a cautious approach, where households are choosing to hold onto their cash instead of committing to large financial obligations.
Housing market outlook
Unless there is a strong rebound in March 2025, housing sales in Q1 2025 are unlikely to match the levels seen at the end of 2024. Market conditions remain fragile, with escalating between the United States and the EU--followed by --adding to economic uncertainty. Additionally, the European Central Bank remains cautious and has yet to provide a clear signal on potential interest rate cuts, keeping borrowing costs high. Meanwhile, the during Q4 2024 may discourage some buyers, particularly after the temporary boost in transactions driven by government tax and credit incentives. Furthermore, consumer confidence in major purchases, including housing, in March. With multiple headwinds at play and little sign of renewed momentum, the strong housing market recovery seen in late 2024 appears to have been a temporary surge rather than the start of a sustained upward trend.