Carte blanche: Hot potato, evergreen topic for the media, national burden… when talking about “housing in Luxembourg” many terms come to mind.
But no matter how it is considered, “housing”, its affordability and availability, is above all a social issue, resolutely inseparable of family and career paths.
The topic interests us all because it relates to our wallet and, moreover, to our intimacy, comfort and well-being. According to the famous French architect Le Corbusier: “Le logis c’est le temple de la famille” (the home is a family’s temple). Plus it is a fundamental pillar of social cohesion that shapes the image of a country. Especially where nearly half of the resident population comes from abroad. Time to look around the property.
Let’s start with 3 sharp data points for Luxembourg. In 10 years, the population has grown by more than 20%, employment by more than 30%, and housing prices by 40%. It thus makes no sense to analyse the evolution of prices without understanding the ongoing demographic, sociologic and economic disruptions.
First, rising prices reflect demographic dynamism which is a result of the economic prosperity of the country. This fuels a growing demand that the existing skimpy and stagnant offer absorbs with difficulty, and at higher prices. Yet, according to Idea Foundation projections, with an average of 7,000 new households expected per year from now to 2030, new needs will have to be filled.
Moreover, the transformation of the resident population brings new expectations and new needs regarding housing, in terms of figures, forms and practices. Younger, more alone, more qualified, newcomers are also professionally and a fortiori geographically more mobile. In 10 years, more than 200,000 people have come to Luxembourg, but in the meantime 110,000 have gone. In 2015, those mobility rates have reached a peak (with 6.5% of the total population and 12.2% of the foreign population)! These massive moves suggest constant back-and-forth on the real estate market, calling for a certain dose of flexibility.
But looking at the political frame of housing in Luxembourg, it seems that old remedies are still applied to new pains. Property is deeply rooted in policies and mentalities. For many reasons: economic and patrimonial (no capital need, perceived lack of attractiveness of other investments, interest rates historically low, and high return on a non-risky investment, ensure one inheritance, etc.); sociological not to mention sentimental (maintaining one quality of life, land and family attachment, etc.); but also political (existing territory equilibrium, election ends, etc.). Despite recent legal developments, the country still seems to hesitate on the accurate measure and targets to favour.
No less than eight government ministries and over 100 local councils take part in the housing policy, through public aid or fiscal advantages, with an envelope of at least €630m in 2015, among which three-quarters concern fiscal favours “for everybody”.
Yet, given the scarcity of the supply, those fiscal kickbacks tend to become “extra” purchasing power that exacerbates price competition in the housing market, leading to ever higher prices. A consistent part of those advantages thus tend to lose their “universality” and only benefit those who can compete. A strategic vision is needed to prevent the duality of the market between insiders and outsiders to keep on growing--at the price of social cohesion.