The cost of renting a home has surged, while asking prices have softened, according to a recently released report.
This trend is primarily attributed to potential buyers shifting towards the rental market in response to rising interest rates, figures published by the property listings site Athome showed.
Advertised sale prices decline 7.5%
Athome noted that the downward trend that emerged at the beginning of 2023 continued to impact all regions of the grand duchy.
Notably, significant decreases were observed in the west (-11.5%), the north (-7.9%), and the centre (-7.3%).
While the south (-6.3%) and the east (-4.9%) experienced slightly milder declines, the overall trend indicates a decrease in advertised sale prices.
Rents on the rise
The rise in interest rates has had an immediate impact on the real estate market, prompting many potential buyers to reconsider their options and opt for renting instead.
This shift has resulted in double-digit rent increases over the course of a year, said Athome.
Specifically, in the centre region of Luxembourg, rents have surged by 12.9%.
Similar developments have been observed in the south and the east, with rent increases of 11.0%.
The north (6.9%) and the west (6.7%) have also experienced notable but relatively moderate growth in rental prices.
Immotop, another property listing agency, has also reported a continued decrease in property prices alongside an increase in rental prices.
According to Athome, rental costs have been on a sharp incline since 2022, narrowing the gap between monthly mortgage payments and rental expenses. This shift makes property ownership a more competitive and viable option, the property listing agency suggested.
Additionally, buyers are increasingly confident in negotiating sale prices--a practice that was relatively uncommon just two years ago.
Athome’s data is based on asking prices for listings posted on its site.