Residential real estate prices in the small prosperous Grand Duchy of Luxembourg, like in neighbouring countries Germany and Belgium, seem to have risen even faster as a result of COVID-19. New figures from the state statistical institute Statec shows that prices rose over the first nine months of 2020 by 13.9% - even faster than in the previous year 2019, itself a record when prices rose 10.12%.
The increase in 2018 was 7%, in 2017 it was 5.6%, and in 2014 it was 4.4%, so the upward trend has been consistent. Apartment prices in Luxembourg are now on average 53% higher than they were five years ago, with prices rising at more than twice as fast as the eurozone average, when 2020’s increase rate is taken into account.
In September 2020 the average price of an apartment rose to €583,072 from the previous year’s €529,286 – at a time when the average disposable income of Luxembourg inhabitants shrunk slightly.
The actual number of sales was down slightly over the first nine months, to 4,624 in the period compared to 5,344 last year.
The increase rate of 13.6% hides some discrepancies. For example, new-build apartments are 10.8% more expensive, while existing apartments increased in price by 15.3% (houses 13.8%; apartments 17.5%). The most important factor for price differences is usually the distance to Luxembourg City.
Luxembourg has a high rate of home ownership, with 69% of households in Luxembourg own their property, with 26% owning further properties. The majority of households also no longer have any real estate debts to pay off, with the proportion of households repaying mortgage debt 31.2%. These figures (from 2018) come from the Luxembourg Finance Consumption Household Survey compiled by the Luxembourg Central Bank and the Luxembourg Institute of Socio-Economic Research.
Ownership, versus renting, makes a big difference to individuals’ personal wealth. Homeowners (with mortgages) subsequently have median assets of €502,000 as against those who continue to rent, whose personal net assets amount to only €23,000.
