Is a Recovery in 2024 Possible?
After a disastrous 2023, players in the real estate market are hoping for a recovery as soon as possible. Will it happen in 2024? The question was asked on La Bulle Immo of RTL to three experts: Pierre Clément, CEO of Nexvia, Soufiane Saadi, CEO of atHome Group, and Julien Licheron, researcher at LISER.
This podcast is only available in French.
In 2023, the Luxembourg real estate market experienced an unprecedented decline in activity, particularly in the new construction sector, with a notable collapse in off-plan sales of apartments (VEFA). House prices have also fallen, mainly for existing properties, and rents have stabilized after an increase in 2022.
While the prices of existing goods have returned to more reasonable levels, experts are concerned that the recovery in demand could lead to a rapid increase in prices on these goods given the limited available stock. They underline the crucial importance of resolving the structural problems of the real estate market to maintain the attractiveness and competitiveness of Luxembourg.
Decline in activity
Activity in the real estate market, particularly in the new construction sector, fell sharply in 2023 compared to previous years. Sales in the future state of completion of apartments were particularly affected, recording a significant drop in transactions.
Drop in sale prices
House prices have also seen a decline, with a notable reduction in the prices for existing property. This decline extended to all segments of the real estate market (existing and off-plan, apartments and houses), including new constructions, although the latter was modulated by the decline in activity and certain developers’ needs to reduce their prices to sell their goods.
Stabilisation of rent prices
After a sharp increase in rents in 2022, advertised rents saw a stabilization in 2023. This was attributed to a constraint related to tenants' incomes, which did 2024. not increase significantly to allow for larger rent increases.
Impact of teleworking
New teleworking policies, with a reduction in the number of teleworking days allowed, have led some workers to consider living closer to their workplace to reduce commute times, which may impact housing demand particularly in Luxembourg City.
Trends for 2024
Existing property prices, after a very sharp decline, risk increasing again if demand increases, particularly in a context of a resumption of economic activity. It is important to resolve the structural problems of the real estate market to guarantee the attractiveness and competitiveness of Luxembourg.