Larger average apartment sizes have fuelled an increase in average sale prices despite fewer transactions, while a large increase in supply has dampened rental prices, according to the government’s housing monitoring centre, which is run by public research institute CEPS and the housing ministry.

The total number of apartments sold during the third quarter of 2012 was down 13.9% from the previous quarter and down 2% from the third quarter last year, based on an analysis of the deeds recorded for single property sales.

The average price per square meter dropped from the second quarter of 2011 by 1.36% for existing apartments and 3.51% for newly built units. However, the average total size of apartments increased. That means average sale prices grew around 6.5% to €322,082 for an average existing apartment of 82.7 square meters and to €386,180 for an average newly constructed unit of 81.7 square meters.

The average sale price per square meter in the capital and surrounding region jumped 7.53% compared to the third quarter of the last year for existing apartments, and increased 3.53% in the region that includes Esch-sur-Alzette. Both regions each accounted for more than one-third of recorded sales.

For newly built units, the average sale price per square meter in the capital region decreased by 1.64% versus the third quarter last year and only gained 0.65% in the region encompassing Esch-sur-Alzette.

Renters fared better. The centre’s researchers noted a sharp rise in the number of rental advertisements published compared to the third quarter of 2011: up 59.2% for houses and 47.6%. Increased supply reduced asking prices: posted rents decreased 1.18% for houses and 9.47% for apartments.

However, advertised rents increased by 0.99% nationally compared to the second quarter of 2012.

Advertised rents in the capital were the highest in the country. The average rent for a house during the quarter was €3,097 per month, up 1.86% from the third quarter in 2011, and €1,295 for an apartment, an increase of 0.37% over the same period last year.

Luxembourg City represented about 16% of the total rental market for houses during the third quarter and more than 40% of apartment rental listings, the centre reported.