Activity in the real estate market contracted sharply last year. The number of transactions was down 17.7% for the sale of flats, with the financial volume of these transactions shrinking 13.4% between the third quarter of 2022 and the same time in 2021, the latest data available.
The number of houses sold during the same time was down 12.6%, with the number of building plots changing hands having dropped by 25.1%.
Unemployment office Adem at the end of February reported 122 real estate agents registered as jobseekers, the highest number ever and an increase of 31.2% year-on-year. Even during the pandemic, which left many agents out of work because people were unable to view apartments under lockdown rules, there were fewer jobseekers in the sector.
But requests for partial unemployment by companies in the sector were denied by the so-called economic committee, which once a month meets to analyse the labour market and assess requests for partial unemployment.
Under this measure, the government pays 80% of employee wages while the company continues paying social security contributions and keeps their jobs open in anticipation of an upturn in business. The measure is open only to specific industries.
Out of 97 applications received for March, 79 were approved during the committee’s meeting at the end of last month. Six applications came from the construction and real estate sectors--affecting roughly 30 employees--but all were refused, economy minister Franz Fayot said in answer to a parliamentary question on Tuesday.
Jean-Paul Scheuren of the Luxembourg real estate chamber in January said that real estate agencies are experiencing a drop in turnover of 40-50%.
There was less construction last year, with a further slowdown anticipated for 2023. At the same time, prices remain high--even though growth has slowed down--and high interest rates mean that buyers’ budgets don’t stretch as far.
Self-employed could lose out
The chamber has submitted a proposal for a job retention plan to the government. Fayot on Tuesday said this would be discussed in the economic committee’s next meeting at the end of this month.
Under job retention plans, the government traditionally assists companies in providing training to employees to more easily find another job but also helps in temporarily reducing working hours or managing voluntary departures.
There is however no legal framework to support self-employed real estate agents, who either manage their own business or work as contractors on commission, rather than receiving a salary as an employee.
There were nearly 1,600 real estate agencies in Luxembourg at the end of 2020, according to Statec data, with more than half of them having no employees under contract.
While Scheuren is now pushing for a job retention plan, he had told Delano in March 2021 that there are too many agents in the sector compared to the size of the market, with firms criticised at the time by lawmakers for using aggressive tactics to add properties to their portfolio, such as knocking on people’s doors asking if they are by any chance looking to sell.
While Adem had a record number of real estate agents registered as unemployed last month, it did not observe a similar trend for notaries, whose business is also impacted negatively by the downturn in the real estate market.
“We didn’t notice any relevant evolution in the last few months,” a spokesperson said. The chamber of notaries in an email told Delano its members are under no obligation to report layoffs or vacancies to the organisation and that it cannot comment on an increase in jobseekers.
A spokesperson in an interview with Delano’s sister publication Paperjam in January said that notaries work in a broader field of activities and that the sector would not join the real estate chamber in its request for partial unemployment or a job retention plan.