Adjusted Prices and Falling Interest Rates Attract Luxembourg HomeBuyers

Learn how adjusted prices and falling interest rates are attracting buyers back to the real estate market. Stay ahead of the curve with this market update.

As AtHome analyzes the performance of the Luxembourg property market in the first quarter of 2024, there is a glimmer of optimism amidst various indicators. With "adjusted" selling prices, stabilizing rents, and a notable decline in interest rates, the property landscape suggests a gradual resurgence. AtHome's latest report anticipates a transitional phase in 2024, with a more robust recovery projected for 2025.

Sales prices continue to "adjust"

During the first quarter of 2024, there was a trend of price adjustments across all regions of Luxembourg. Data indicates a general decrease in prices, averaging around -9.3%. Flats experienced a more pronounced decline at -10.1% compared to houses at -7.7%.

In the Centre region, the average price was €9,512/m², with a moderate decrease of -6.7%. Flats saw a -7.5% adjustment, while houses experienced a milder decline of -4.1%. In the North, the average price was €5,395/m², with a more substantial decrease of -10.5%. Flats recorded a decline of -11.7%, while houses experienced a reduction of -9.6%. The South region had an average price of €6,654/m², reflecting an 11.6% decrease. Flats observed a decline of -12.9%, whereas houses contracted by -8.2%. In the East, the average price was €6,314/m², with a notable adjustment of -10.3%. Flats and houses witnessed declines of -9.0% and -11.2%, respectively. Finally, the West region had an average price of €7,274/m², indicating an average adjustment of -8.7%. Flats and houses experienced declines of -9.5% and -7.3%, respectively.

AtHome highlights that the decline in prices intensified throughout 2023, eventually plateauing towards the year's end and into early 2024. This alignment of price adjustments with increased market activity signals a promising trajectory for transactional recovery.

Luxembourg Rental market shows signs of stability with modest 1.7% increase

The rental market in Luxembourg is showing signs of stabilizing, with a notable but moderate 1.7% increase in rents on average during the first quarter of 2024. AtHome notes a deceleration in the pace of rent hikes, signaling a potential shift from renters back to buyers in the housing market. This contrasts with the previous trend of a substantial transition from buyers to renters.

However, the moderation in rent growth varies across property types. While flats experienced a 2.5% increase, rents for houses decreased by 6.2%. In the Centre region, the average rent was €2,101, reflecting a modest increase of 0.7%. Notably, flat rents increased by 1.6%, whereas Luxembourg house rents sharply declined by 9.8%. In the North, the average rent was €1,462, indicating a noteworthy increase of 5.1%. Flats witnessed a substantial increase of 6.0%, while Luxembourg house rents slightly decreased by -1.0%. The South region had an average rent of €1,581, with a growth of 2.9%. Flat rents rose by 3.3%, while house rents declined by -3.3%. In the East, the average rent was €1,812, marking a moderate increase of 1.9%. Flats experienced a significant rise of 6.3%, contrasting with a sharp decline of -10.5% for houses. Finally, the West region had an average rent of €1,932, with a slight increase of 2.0%. Flat rents saw a modest increase of 1.2%, while Luxembourg house rents rebounded with a notable rise of 6.2%.

Luxembourg Interest rates experience substantial decline

In a positive development for potential property buyers, Luxembourg interest rates are finally witnessing a notable decrease, marking a significant shift from the upward trajectory observed in previous years. This news comes as a relief, especially considering that Luxembourg interest rates had tripled by 2022, reaching levels between 4.5% and 5%. According to AtHome, this recent drop in Luxembourg interest rates represents the most substantial decline in the Luxembourg property market since the onset of the crisis. Some banks are even offering very aggressive promotional deals, with rates dropping below 3.5% on certain applications.

The central banks and Luxembourg's banking institutions are optimistic about further reductions in interest rates in the upcoming months. This forecast bodes well for accelerating the recovery of the property market, with projections indicating a potential rebound by 2024-2025.

The Luxembourg property market is showing signs of resilience and recovery in the first quarter of 2024. With adjusted selling prices, stabilizing rents, and declining interest rates, there is optimism for a gradual resurgence in the market. AtHome's report anticipates a transitional phase in 2024, with a more robust recovery projected for 2025.