The average advertised price of an existing flat was €5,742 per square metre while for a flat under construction, the rate rose to €6,646 per square metre; meanwhile, the average cost of a family house came in at €742,335, the report “Le Logement en chiffres” revealed.
Of the types of housing on the market, it was the cost of existing houses that saw the strongest growth (11.8%), compared with newly built flats (+11.5%) and existing flats (+10.7%).
If average advertised costs rose, the actual number of transactions fell, with a 7.4% decline in the sale of newly built flats and a 4.1% drop in existing flat sales.
Why so few sales?
The report author hints at some causes, namely spiralling costs, which are outpricing some parts of the population, particularly in the most sought-after areas which are closest to Luxembourg City. But the data may also be distorted because of the extension of a VAT change from 17% to 3% to stimulate the construction of housing. The rate was extended at the last minute until the end of 2018. Because it was only applicable on the construction of a main residence, it was advantageous for anyone with an existing home in the process of building a new one to sell their first property before the measure expired.
What about rents?
According to 2011 data, 28.3% of the population lives in rented accommodation, but those signing a new lease will feel the sting most here. The report, which was published on Monday, found “enormous price differences” of up to 61% between advertised rents and rents paid in long-term rental contracts. On average, advertised rents on flats came in at €1,611 compared with existing rents at €998.
For a house, the difference was 92%, with average advertised rents at €2,805 and average existing rents at €1,462. Luxembourg law prevents rents from being subject to a kind of automatic indexation in the same way as earnings. Landlords can introduce rent increases but they rarely do, the report found. Statec found that 60% of rented apartments contacted had not experienced a rent increase. For houses, the rate was even higher at 67.8%.