The Idea foundation, created by the chamber of commerce in 2014, released an extensive document highlighting Luxembourg’s housing woes which it says date from the 20th century and shouldn’t be regarded as an entirely recent phenomenon. The steel industry crisis in the 1970s and an increase of investment in the 1980s leading to a surge in real estate prices were put forward in the think tank’s report as examples of Luxembourg’s long-standing housing problems.
A statement by Luxembourg’s parliament in 1990 spoke of "a serious housing crisis that risks leading to a serious social crisis”--a sentiment that is very much relevant today.
In its more than 20 recommendations, the Idea foundation calls on the government to recognise that overpopulation resulting in elevated housing prices is not a recent issue. The capacity of the governing authorities to influence real estate prices appears rather limited, states the report.
While the housing crisis has led to many locals and newcomers to essentially become cross-border workers, it has also increased the wealth of many real estate owners in the grand duchy. The Idea foundation’s report indicates that building more for the sake of building may lead to simply building a higher number of expensive residential units in an already high-priced market.
The government’s subsidies for those looking to buy real estate should not be the same for everyone, according the think tank, but should take into account buyer’s revenue. This should impede the trend of people with higher income having an unfair advantage due.
Doing something to counter vacant residential buildings, which some owners keep in order to raise its value, and incentivising companies to play a more responsible role in the housing market were also highlighted in the Idea foundation’s report as key steps to improving the current situation.