2023-06-27 09:52:03
Prices are falling on the Luxembourg real estate market. A trend that should continue in the coming months. Explanations.
Falling property prices have made headlines several times in recent months. And for good reason, it hadn’t happened for almost 15 years.
Until now, we had no choice but to refer to the advertised prices to estimate the price drop. This Tuesday, things changed with the publication of the latest figures from the Housing Observatory.
This is very tangible data since OH relies on notarial deeds to establish its averages. They also confirm the trends announced by the atHome group in recent weeks.
The fall in selling prices is confirmed in the latest publication from the Observatoire de l’habitat. She indicates an overall price drop of 1.5% over 12 months. “A decline driven by the existing home segment (-4.3% over twelve months)” can we read.
If the observation is less obvious on apartments in VEFA (-0.4%) or that we even see a slight increase in the prices of existing apartments (+0.4%), the Habitat Observatory emphasizes that the drop in prices “is strong over the quarter compared to the 4th quarter of 2022“.
And that’s not all because this fall in price is coupled with a sharp drop in activity. The most affected segment is unsurprisingly that of apartments under construction: -72.5% compared to the 1st quarter of 2022. As for existing apartments (-41.5%), houses (-42.9%) or even building plots (-41.4%), the situation is no better.
A situation that should not get better in the months to follow. Indeed, at the Observatory of the habitat, the indicators of the fall in prices announce that “the visible downward cycle in notarial deeds should continue in the 2nd and 3rd quarters of 2023“We are also expecting falls of around 7.2% in the price of apartments and 4.7% for houses.
Remember that the European Central Bank (ECB) announced in May a new increase in interest rates. A decision that should once again impact the borrowing capacity of potential buyers. The fall in prices should therefore, in all likelihood, continue in the months to come.
Rent increases continue
Even as prices fall on the sale market, rents have started to skyrocket since a few months.
In the 1st quarter of 2023, it reached +11.1% compared to the 1st quarter of 2022. The indicators from the Housing Observatory show an increase of 2.6% in the first quarter of 2023 alone.
An increase “significantly higher than inflationnotes oh. Luckily, rents during the lease are not affected by this very strong increase for the moment, confirms Julien Licheron, researcher at Liser.
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