The event featured Nobby Brausch, head of department, corporate banking and public sector at Luxembourg’s Spuerkeess and Julien Licheron, research associate at the Luxembourg Institute of Socio-Economic Research (Liser).
Licheron specialises in housing economics and participates in research at the Observatoire de l’Habitat, a body monitoring housing and land prices and availability in the country.
Here are five takeaways from the evening:
Little impact from the pandemic so far.
Data from the Observatoire de l’Habitat shows that prices in the second quarter of 2020 continued their steady rise, climbing by around 15% compared to the same time last year. A side effect of the pandemic has been less movement in the market with roughly 20% fewer real estate transactions than prior to lockdown and travel restrictions. But Licheron said he had expected this dip to be more pronounced and that activity had already picked up in the third quarter.
There’s enough land.
One solution proposed by policymakers to increase the amount of buildable land is to expand the so-called perimeter, opening up more land for development. But the problem isn’t the amount of land available, Licheron said. The land inside the perimeter is enough to build between 50,000 to 80,000 housing units, but owners are sitting on the empty plots. Starting construction on what’s available should be a priority, Licheron said.
Prices no longer a question of supply and demand.
The persistent increase in prices is no longer only a question of the gap between supply and demand. While Licheron said that just a few years ago he would have denied there is a housing bubble, he added that that’s no longer the case. The supply-demand gap hadn’t changes over the past decade, Licheron said, and annual double-digit price increases are out of step.
Government is tackling affordable housing.
The Observatoire de l’Habitat was founded in 2003 and Licheron has worked for the monitoring body for ten years. He said the challenges are much the same and lauded a shift in policymaking towards supporting affordable housing. Projects such as the Cloche d’Or, Royals Hamilius or Place de l’Etoile are also needed, he said, but more attention is now being paid to people with smaller budgets.
Grand duchy is pushing Greater Region prices.
Licheron said there are “strong” cross-border flows of people moving from Luxembourg to regions across the border to find cheaper housing. Together with well-paid native cross-border workers, they are pushing up prices in the greater region. The Observatoire is working on setting up a greater region monitoring system to study exactly this phenomenon.