Trends in the Luxembourg real estate market
Are you planning to move to Luxembourg? It is important to note that real estate prices there are structurally high due to a housing shortage. New construction is not sufficient to meet growing demand. Although recent months seem to indicate a market recovery, new real estate projects continue to stall.
The latest real estate trends in Luxembourg
A slowdown in 2025?
In 2025, the Luxembourg real estate market entered a phase of stabilization after several quarters of readjustment.
Sale prices remain stable overall, despite a slight decline in new apartments, while older properties continue to rise year-on-year.
The rental market is also relatively stable, with moderate variations depending on the region. However, significant differences remain: the west and center of the country remain dynamic, while the east is experiencing a sharp slowdown in both sales and rentals.
Despite these contrasts, the market remained active throughout the year. The outlook for 2026 suggests that this stability will continue, with a gradual recovery in new construction rather than a rapid rebound.
Decline in purchase prices in 2023 and stabilization in 2024
Real estate sales slowed significantly in 2023 and 2024. It must be said that following the rise in interest rates, many prospective buyers were refused bank loans.
Continuing on from 2023, the first part of 2024 confirmed a downward trend in purchase prices. Although the last quarter of 2024 saw a recovery in transactions, this recovery was not reflected in prices. On the contrary, developers in particular finally lowered their selling prices for new properties.
Continued rise in rental prices in 2023 and 2024
On the rental market, rents continue to climb. However, the fourth quarter of 2024 finally saw a slight drop in rents, with a 3.7% decrease for older houses and a 1.9% decrease for apartments compared to the third quarter of 2024. Only the Centre region continued to see rents rise at the end of 2024.
More and more young professionals are now looking for shared accommodation to reduce their rental costs.
Don't want to live in a shared apartment? Here are our tips for reducing your housing budget, particularly through rent subsidies.
What are the key takeaways from the Luxembourg real estate market?
Falling sale prices, rising rents
Luxembourgcontinues to attract a working population in search of employment, but also a high-income population. These people are looking for a privileged and secure living environment.
However, the housing shortage remains a major challenge for the country.
At the end of December 2024 (source: Immotop), national prices averaged €8,261 per square meter, with €10,599 per square meter in the Central region. As a reminder, prices peaked in March 2023 with an average of €9,123 per square meter.
As for rentals, asking prices continue to climb, with an average price per square meter of €28.79 in December 2024, compared to €24.91 in February 2023.
Location, a key factor in prices in Luxembourg
There are, of course, disparities in real estate prices in the Grand Duchy. The Canton of Luxembourg remains undoubtedly the most expensive. The average budget for purchasing a house is more than €1,000,000, which is double the price in the north of the country. The further away you are from the city of Luxembourg, the more affordable the prices are.
In December 2024, prices per square meter in the canton of Luxembourg averaged €11,210 for purchases and €32.81 for rentals.
Prices vary depending on the type of housing sought
The size and type of housing are key factors in determining prices. Overall, prices per square meter decrease with the size of the property. It is true that small properties are attractive to investors, who are driving up the market.
An apartment under construction commands a premium of 15 to 20% over an older apartment of equivalent size and location. However, investors are beginning to lose interest in new properties in favor of older ones. The returns are indeed more attractive. Developers are still reluctant to lower their prices. Many developers have had to close down during this period.
All this information is also very important if you yourself have a property to sell.
What is the outlook for real estate in Luxembourg?
The Frieden government, elected in October 2023, has made housing a priority for the country.
Local authorities now want to increase the proportion of apartment buildings and two-family houses versus single-family houses . Only 15 municipalities out of more than 100 have a housing stock that is predominantly apartments. Among them are the top three: Luxembourg City with 80% apartments, Esch-sur-Alzette with 69.4%, and Hespérange with 63.1%.
In concrete terms, the stock of single-family homes is declining. The proportion of apartment buildings is increasing in all housing under construction. More and more single-family homes are now being replaced by two-family homes or even apartment buildings.
But when we talk about a population of more than 1 million people in 2050, what are the prospects for the future? In order to prepare the country to welcome these new residents, reducing the size of housing could be considered in order to increase the number of offers. Legislation could also evolve to allow for higher occupancy rates, for example by renting out unoccupied rooms.
But the main challenge today is to persuade landowners to release land, even though it is not in their interest to see prices fall . According to a recent study by the Observatoire de l'Habitat, 84% of potentially buildable land is owned by around 50 private individuals and companies. The next finance laws should be drafted with this in mind.
In the context of recent trends in the Luxembourg real estate market, it is crucial to understand the nuances of life in the Grand Duchy. Read our in-depth analysis of what life in Luxembourg is really like.
Real estate retrospective of recent years
Slowdown in prices in Luxembourg in 2022
After years of overheating, 2022 marks a slowdown in real estate prices with an increase of only 5.6% over one year, far from the double-digit price increases seen in previous years.
Decline in real estate transactions in terms of number and volume
Sales of new apartments fell by almost half in 2022, while the number of transactions for older apartments fell by almost 18%. Financial volumes fell by 50.1% for new apartments and 18.7% for older apartments.
Rise in rental prices on the Luxembourg market
The end of 2022 has already seen a rise in rental prices. Leases signed in the last quarter show an 8% increase over one year for apartments and +6.9% for houses. Less than 13% of rental listings are for houses, and this proportion is continuing to decline. The market remains very limited, suggesting that a stronger increase in rents is to be expected.
Real estate prices rise by more than 10% in 2020 and 2021
The lockdown in 2020 and the widespread adoption of teleworking have once again driven up real estate prices. These years will see the 2019 increase confirmed, with housing prices rising by 14.5% in 2020 and 13.9% in 2021.
New construction is on the rise, not only in Luxembourg City but throughout the country. New projects are constantly emerging (see real estate market). However, these projects are not enough to curb the rise in prices.
Individuals are looking for outdoor space, which became essential during lockdown, and are investing in their interiors. By the end of 2021, the average price of a house in Luxembourg is expected to be €1,371,000.
The capital, Luxembourg City, remains highly sought after, and prices are skyrocketing, including in the surrounding areas. The north of the country is increasingly in demand, particularly thanks to the Nordstrooss (motorway to the north). Prices there are still affordable. The south continues to attract buyers due to lower prices and good transport links to the capital. By 2030, a rapid tram service will connect the Cloche d'Or district in Luxembourg City to Esch-sur-Alzette via Foetz in less than 15 minutes.
Price increases in the real estate industry are progressing more rapidly in Luxembourg than in other European countries, demonstrating the growing interest of clients in this destination.
A first surge in prices in 2019 in the Luxembourg real estate market
Housing figures published in the fourth quarter of 2019 by L'Observatoire de l'Habitat and Statec confirm the overall feeling. Real estate prices have skyrocketed over the last 12 months. Housing prices rose by 11% over one year, from the fourth quarter of 2018 to the fourth quarter of 2019!
This increase is widespread and more or less consistent across the different types of housing on the market. House prices rose by 9%, new apartments by 12.4% and older apartments by 12.1%. At the end of 2019, prices stood at €6,057 per square meter for existing apartments and €7,145 per square meter for apartments under construction.
As for single-family homes, the average price to purchase a property in 2019 was €789,474, an increase of €40,000 in just two quarters.
Due to Brexit and the arrival of foreign workers on the Luxembourg market, the existing imbalance between supply and demand for housing has increased. Despite the many projects underway, the future supply of new housing is not keeping pace with population growth.
Luxembourg's sought-after neighborhoods, such as Limpertsberg, a favorite among expats ; Belair, a chic and traditional neighborhood; Kirchberg, a business district; Grund, a historic neighborhood; and Merl, also traditional, remain safe bets. Prices in these neighborhoods remain high. In the rest of the country, the south is accelerating its development. In the west, the municipality of Steinfort is regaining its appeal thanks to investments in infrastructure projects. The north of the country is attracting new interest due to the development of road transport networks. Prices there remain more affordable. The municipalities of Ettelbruck, Diekirch, and Wiltz are currently the most dynamic.
The introduction of free public transport is increasing the value of properties located close to transport networks.
2018: continued rise in real estate prices in Luxembourg
In 2018, the market experienced a record 7% increase in prices compared to the previous year. According to residential real estateexperts , over the last 10 years, this increase has been more in the region of 5%.
The price increase is particularly noticeable in the market for older apartments. In this sector, the increase is close to 10%! New apartments, on the other hand, increased by "only" 6% in 2018 compared to the previous period. House prices also rose, but to a lesser extent. This price growth is widespread across the country, particularly in the south, which is experiencing rapid growth.
Luxembourg's attractiveness in terms of population inflows seems to be the main explanation for this price increase. In 2018, more than 11,000 people moved to Luxembourg, representing 1.8% of its total population. The constant increase in residents is no longer in line with the supply of new housing. In 2018, more than 6,000 additional apartments would have been needed to meet demand. However, the supply of new units was barely 2,600. In addition, the very low level of bank interest rates on loans is supporting demand for real estate purchases. This is contributing to prices rising to record levels.
Rental prices also rose significantly in 2018. This increase was particularly noticeable in the Bonnevoie, Gasperich, Merl, and Belair neighborhoods. There was a 6-8% increase in the Gare neighborhood alone.
2017: the beginning of the rise in Luxembourg real estate
Whether for old or new properties, real estate prices in Luxembourg jumped by 4.10% for houses and 4.70% for apartments in 2017. These figures peaked at 6.10% for properties under construction. At that time, a new apartment was valued on average 25 to 30% more than an older apartment of the same size. The average price of an apartment was €420,000, compared to €690,000 for a villa.
The joint report by the Housing Observatory and Statec (National Institute for Statistics and Economic Studies) was unequivocal at that time. The Grand Duchy appeared to be a safe bet and highly prized by investors. The high quality of real estate and attractive tax regime made Luxembourg an attractive country for investment. In 2017, there was a 12% increase in the volume of transactions across the country.
Find out more about housing in Luxembourg.
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Source: Observatoire de l'Habitat – Liser
Photo credit: Liser