Several real estate experts have analyzed recent developments in the Luxembourg real estate market.
According to a report by the real estate group “atHome”, the prices of old homes, which changed owners at least once, stagnated somewhat in the first quarter of 2022. The price increase is currently around 3%, compared to 6% in the last six months,
Prices in the north and east of Luxembourg have slowed the most, although they continue to increase compared to previous years.
Experts predict that Luxembourg could see an annual increase of between 3 and 5%, as the demand for housing remains high, especially in relation to supply. In order to balance supply issues, developers should consider using more land, the report says.
The construction sector, however, is facing ongoing challenges, which can be traced back to supply chain issues caused by the pandemic and exacerbated by the Russian invasion of Ukraine. Prices for materials such as steel, cement and lumber continue to soar, with no end in sight to inflation.
As a result, construction costs increased by up to 20%.
The panel added that the majority of people currently buying homes are investors, primarily those who don’t need large loans or mortgages.
Home loans have also become more expensive recently, particularly fixed rate mortgages, which have climbed to 2.8%. Homeowners who take out 30-year mortgages for €800,000 will now pay around €410 more per month.
Variable rates remain at 1.4%, which means that a combination of fixed and variable rates is recommended for people interested in buying a home in the Grand Duchy.
Read the full report here.