Decline in Demand for Affordable Apartments in Luxembourg

Sales of state-subsidised affordable housing in Luxembourg plummeted by nearly 80% in the past year, highlighting a concerning trend in the real estate market.

Luxembourg’s affordable housing developer, the Société Nationale des Habitations à Bon Marché (SNHBM), has been significantly impacted by the stagnant housing market in the country. According to a report by Luxemburger Wort, the SNHBM sold nearly 80% fewer subsidised properties in 2023 compared to the previous year. Despite a long waiting list of potential buyers, only 38 new homes were sold by the SNHBM last year, including 16 apartments and 22 single-family houses, a sharp decline from the 187 units sold in 2022.

The decrease in sales was expected due to high interest rates that made mortgages unaffordable for many Luxembourg residents. In fact, more than a third of the 289 homes constructed by the SNHBM in 2022 remained unsold halfway through last year. The organisation cited various factors contributing to the slow sales, including high loan interest rates, rising construction costs, and administrative requirements for archaeological excavations.

New SNHBM apartments are offered at lower prices to qualifying buyers, thanks to state housing subsidies. For example, apartments from the Nonnewisen project in Esch-sur-Alzette are sold at prices ranging from €284,294 to €678,265 after the subsidy, with subsidies amounting to €34,882 per unit. Additionally, subsidized apartments near the airport in the Elmen site are priced between €5,400 and €5,900 per square meter.

Buyers can qualify for subsidised SNHBM units based on their net income, with income thresholds starting at just below €4,000 a month for childless adults and €7,180 a month for households with one child. Despite the challenges faced by the SNHBM in the current housing market, the organisation continues to provide affordable housing options for qualified homebuyers in Luxembourg.

The slowdown in the housing market has had a significant impact on the SNHBM, leading to a drastic decrease in the sale of subsidised properties. However, the organisation remains committed to providing affordable housing solutions for residents in need.