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Luxembourg real estate is experiencing the highest price increase in 10 years

Apartments prices continue to soar in the Grand Duchy of Luxembourg. On average, property prices in Luxembourg increased by 7% in 2018 compared to the previous year. In Luxembourg, the residential real estate market experts of the Engel & Völkers group explain that this price increase has been a constant feature for years. Nevertheless, it has never been stronger. Indeed, in recent periods, it has been in the order of 5%.

The highest increase was in the prices of existing apartments. Indeed, it is close to 10%; a record evolution for a calculation period of only one year.
The price of new apartments, on the other hand, recorded a price increase of around 6% last year.

In 2018, house prices also increased, but relatively less significantly than apartments.

This growth is not unique to the capital. It is well established throughout the Grand Duchy. Especially in the south of the country where prices are increasing at an ever faster rate. 

The main drivers of this strong growth 


The main reason for this trend is the increase in the population of the territory. Indeed, last year Luxembourg attracted more than 11,000 people due to its clearly acknoledged attractiveness. Nevertheless, the supply of new housing is unable to meet the growing demand, thus driving residential real estate prices upwards. We estimate that in 2018, the annual demand was 6,000 apartments for a supply of just 2600 units. 

Moreover, it should be noted that low borrowing interest rates provide considerable support for demand and thus contribute to record high prices.


What are the consequences for the rental market?


What about the prices of rentals in Luxembourg? There is a direct consequence of the evolution of property prices at the time of purchase. During 2018, they therefore increased rapidly. More particularly in the districts of Bonnevoie, Gasperich, Merl and Belair as well as in the station district (6%-8%), which are areas where Engel & Völkers Luxembourg group agents are particularly active. 
 

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