The Luxembourg housing market has witnessed a remarkable rebound in the fourth quarter of 2024, driven by a combination of and . According to data from the Luxembourg Central Bank, the total volume of housing loans disbursed in the fourth quarter 2024 reached €1.6bn, marking a 31% increase from Q3 2024 and more than double the €787m recorded in Q4 2023.
This surge is largely driven by temporary tax credits under the 2024 “Bëllegen Akt” and a , particularly benefiting first-time buyers purchasing homes as their primary residence. Combined with declining mortgage rates, these measures have encouraged more buyers to enter the market, leading to a sharp rise in both the volume and number of loans issued. Notably, these temporary measures have now been until June 2025, further supporting market activity.
The recovery has been consistent across different property types, with 1,828 loans granted for independent houses and 1,983 for apartments in Q4 2024. This represents a significant rise from the 953 and 945 loans issued in the same period a year ago, respectively.
Shrinking loan sizes
While the total volume of housing loans has soared, the average loan size remains smaller than 2021 levels. This suggests that despite the easing of mortgage rates, banks are maintaining a cautious approach when issuing new loans, particularly given that rates are still considerably higher than three years ago.
House prices
At the same time, independent house prices are continuing their upward trajectory. Data from the registration duties, estates and VAT authority (AED) shows that the average price of a house surpassed €1m in Q3 2024, the most recent data available. While Q4 figures have yet to be released, if the trend persists, house prices are expected to climb further.
For apartments, the average price stood at €625,000 in Q3 2024, according to our calculations based on AED data. However, Statec, the national statistics bureau, which uses a different methodology, reported a slightly lower figure of €618,963 for the same period. Statec does not provide an average cost for independent houses.
Outlook
With lending activity accelerating and property prices rising again, the Luxembourg housing market appears to be in a recovery phase. However, the relatively small size of individual loans suggests that banks and buyers remain cautious. Nonetheless, government support measures are expected to sustain the market until Q2 2025, provided the broader economic landscape, employment levels and interest rate policies remain stable.