Real estate market in Luxembourg: 809 apartments sold - market activity in the third quarter of 2023 well below the previous year's level

Real estate market in Luxembourg: 809 apartments sold - market activity in the third quarter of 2023 well below the previous year's level

According to a report by www.wort.lu,

809 apartments were sold in Luxembourg in the third quarter of this year. This is significantly less than in the years before the pandemic. For comparison: In the period from 2017 to 2019, an average of 1,748 transactions were carried out in the third quarters, more than double. This slump was triggered not only by the pandemic, but also by the economically tense phase afterwards. The number of apartment sales between July and September 2023 fell by a good 38 percent compared to the third quarter of 2022.

Where there is construction, there is a lack of demand
Accordingly, activity in the residential real estate and residential land markets in the third quarter of 2023 was at a level in all segments that was well below that of previous years. The number of transactions has fallen sharply over the past three quarters, particularly for apartments under construction. With 119 sales in three months, the value is almost 60 percent lower than in the same period last year. In the three years before the pandemic, an average of five times as many apartments in construction status were sold during the same period.

Houses are also difficult to sell
In the existing apartments segment, the number of sales (690 in the third quarter) fell somewhat less sharply, down almost 32 percent compared to the comparable period in 2022. However, this value is also far below the average of the three pre-Corona years, in which an average of 1,077 existing apartments were sold between July and September. When it comes to home sales, the decline in activity in the third quarter of 2023 has also been very sharp. The number of home sales fell 47.3 percent compared to the same quarter in 2022.

Real estate prices continue to fall, rents are stagnating
The development also leaves its mark on real estate prices. According to the index provided by Statec, prices fell by 13.6 percent in the third quarter of 2023 compared to the same period last year. The decline was particularly strong, at 18.7 percent, for existing houses, as these are obviously the most expensive properties and therefore the lower purchasing power apparently had the greatest impact. The value of existing apartments fell by 12.3 percent and that of apartments under construction by 7.7 percent. When it comes to rents, however, the development is somewhat different: after several quarters of strong increases, advertised apartment rents have apparently stabilized since the second quarter of 2023. However, the increase in advertised rents remains significant over twelve months: an increase of 4.1 percent between the third quarter of 2022 and the third quarter of 2023. The advertised rents for houses, on the other hand, fell by 2.5 percent in the third quarter of 2023 compared to the second quarter. The value is still four percent higher than in the same period last year. However, the authors of the survey point out that only 13 percent of rental advertisements relate to entire houses and that prices therefore fluctuate extremely.

As an expert in the real estate market, it is obvious that the Luxembourg real estate market continues to be in a downturn. The reduced demand for both new construction and existing apartments and houses has led to a decline in sales activity and a noticeable drop in prices. This development is expected to continue to shape the real estate market in Luxembourg and has implications for both buyers and sellers. In particular, the sharp decline in activity in the apartments under construction segment is alarming and suggests that this trend may continue in the coming quarters. It remains to be seen how the situation will develop and what measures will be taken by the government, real estate developers and brokers to revive the market.