Luxembourg real estate market: a gradual price decline
Luxembourg’s real estate market is experiencing a slowdown in the once rapid property price declines. In the second quarter of 2024, property prices fell by an average of 3.8% compared to the previous year. This marks a continuation of the downward trend observed throughout 2023 when prices fell by 6.4% in some areas. The reduction in prices is largely attributed to the rising interest rates, which have reduced the purchasing power of buyers and made property investments less attractive.
Regional price disparities
The price variations across Luxembourg’s regions are significant. In August 2024, the average price per square meter in the central region was €10,734, while in the more affordable northern region, prices were as low as €6,114 per square meter. These differences highlight the strong demand for property in Luxembourg city and surrounding areas compared to rural regions.
Rent on the rise
While property prices have seen a decline, rents in Luxembourg continue to rise. In August 2024, rental prices increased by 7.75% year-on-year, reaching an average of €28.10 per square meter. This rise in rent contrasts with the cooling property market, making renting an increasingly expensive option, especially in high-demand areas like Luxembourg City.
Outlook for the future
The current slowdown in price decreases may signal a period of stabilization for the Luxembourg property market. However, economic uncertainties, such as potential interest rate hikes and inflation, could continue to influence both property prices and rent in the coming years. Potential buyers are now weighing their options carefully, while developers are increasingly cautious, holding off on new projects to avoid selling at lower prices.
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