Depending on population growth, Luxembourg would have to more than double or even triple its annual rate of construction or conversion Shutterstock

Depending on population growth, Luxembourg would have to more than double or even triple its annual rate of construction or conversion Shutterstock

This projection is calculated on the extreme economic scenario that GDP grows by 4.5% annually, attracting new residents and adding to a need for 324,000 homes in 2060. Even with the modest scenario of 0% GDP growth, the projection suggests the country would need 5,653 homes per year to reach a total of 243,000 new homes by 2060.

This means that depending on population growth, Luxembourg would have to more than double or even triple its annual rate of construction or conversion--research from real estate agency JLL suggests the country constructed an average of 2,600 homes per year since 2000.

Housing needs to change

But builders and architects may want to reconsider what kind of housing the country needs. Indeed, the report's author observes a social phenomenon across the western world that occupancy rates are falling--the number of people living as a couple in middle age is falling, while the number of people living alone is increasing. Among the older generations, life expectancy is increasing, pushing up the demand for housing for couples, singles and collective housing.

Other factors that will play on what kind of housing will best meet this demand are cost. Average house prices in Luxembourg rose by 9% from the fourth quarter of 2017 to the same period in 2018. According to housing monitoring body the Observatoire de l’Habitat, buyers paid on average €5,103 per square metre in 2017 for an existing flat, and €6,351 per square metre for a new-build. Meanwhile, monthly advertised rents rose annually by 3% from 2008 to 2017.