LIFESTYLE - MONEY

Housing price rise forecast to slow



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The housing market will remain driven by a shortage of supply compared to demand. Photo: Nader Ghavami/Maison Moderne 

In the June issue of its Conjoncture Flash, national statistics body Statec suggests that housing prices will rise more gently in 2021 and 2022. A reversal of the market is not to be expected, but rather a return to normal following the atypical years of 2019 and 2020.

For Statec, the acceleration of the increase in housing prices in 2019, and especially in 2020 (+14.5%), is greater than it should have been based on the usual determinants, namely the price of building land, the price of residential investment, the interplay of supply and demand and interest rates.

“This mismatch could be corrected in 2021 and 2022 and lead to less pronounced increases,” the statistical institute writes, agreeing that its forecasts include “a significant margin of uncertainty.”

By calculating from these variables what the price increase for 2020 should have been, Statec arrives at an over-elevation of about 5% for 2020. Extending the calculation to 2021 and 2022, prices should therefore increase by +9% in 2021 and +5% in 2022 respectively.

This article was originally published in French on Paperjam.lu. It has been translated and edited for Delano.