Real Estate Review 2023: Price Trends and Outlook

The year 2023 in Luxembourg has been marked by significant adjustments in the real estate market, reflecting complex dynamics between sale prices, rents, and interest rates. AtHome.lu provides a thorough analysis of the observed developments and prospects for the coming years.

Generalized price adjustments

All regions were affected by a national decrease of -7.0% in sale prices. Apartment prices saw a decrease of -6.6%, while house prices dropped by -7.6%. The Western region experienced the most pronounced decline with -8.1%.

Rental increase with a shift towards leasing

There is an increase in demand for leasing, consequently, rents recorded an average increase of +8.5% in all regions. The Southern region saw the highest increase of +10.4%, while the East maintained more moderate growth at +3.4%.

Stability and slight decline in interest rates

Interest rates on 30-year loans remained between 4% and 4.5% throughout 2023. A slight decline was initiated towards the end of the year, with some offers reaching 3.9% or even 3.8%.

Impact of the energy passport on interest rates

Energy passports A and B are associated with preferential rates, encouraging energy-efficient properties. Buyers undertaking energy renovations are therefore favored by some banks.

Outlook for 2024: anticipated transition period

2024 could see the first interest rate declines in the 2nd or 3rd quarter. Macroeconomic indicators suggest a slight recovery of GDP, although the job market raises concerns. Tax incentives could stimulate short-term recovery, but long-term challenges persist. New construction projects will be limited, although some developers may test the market with riskier projects.

[Source: Athome.lu]