Over the past twelve months, housing prices have risen by 6.9%. Minister for Housing Sam Tanson released the latest statistics published by LISER concerning the housing market on Thursday morning at the request of CSV MPs in the parliamentary commission on housing.
Tanson outlined that the rental market in particular had experienced an acute increase in 2018, with rental costs increasing by 10 to 12%.
The cost of new apartments rose by 8.3%, whereas older houses also experienced a 9.8% price increase. Apartments that are not yet fully built also saw price increases of 2.1%.
The overarching cause of the price increases is the significant demand for housing.
Interest rates and loans are at a historic low, but the difficulty resides in the lack of land available to affront the huge demand. Whilst the country is experiencing a building boom, the offer of homes is not enough to counter the high demand.
Tanson also pointed out that the 2015 VAT increase on second homes, going from 3% to 17%, is another factor contributing to the difficult housing market.
The minister highlighted that the ministry still needed to examine the impact of dropping the so-called 'quart-taux', the tax reduction on capital gains.
LISER, the Luxembourg Institute of Socio-Economic Research, is waiting for statistics on 2019 to be complete before examining the impact on the housing market
Housing: Luxembourg house prices up by 50% since 2010: Eurostat
Martin Jonsson: Renting in Luxembourg - a power imbalance
