From Wiltz to Dudelange via the capital, so-called "affordable" housing projects are developing in Luxembourg, a market where land prices on the private market are rising.

The public authorities intend to accelerate the rollout of social and low-cost housing, with a total of 18 large-scale projects representing more than 4,000 housing units by 2025, and even 5,133 housing units including the first phase. Major projects include “Elmen” in Kehlen and “Wunne mat der Wooltz” in Wiltz.

On Thursday, housing minister Henri Kox (Déi Gréng) presented the first report on the special housing development support fund, a tool launched in April 2020 to provide an overview of subsidised housing projects and mobilised budgets.

In 2020, the fund has 300 projects representing more than 3,125 housing units under construction, for a total financial volume of €514m. Expenses, for their part, reached €96m, an amount expected to double within four to five years, given the new agreements signed with the developers. A total of 8,200 additional homes are in the pipeline, according to the housing ministry.

10% to 35% of income mobilised

More offers actually means more responses to candidates for the acquisition or rental of these properties located below market prices.

"According to our analysis, the monthly cost should not exceed 10% of the disposable income of the less advantaged households, but the ratio can go up to 35% for those who are in the average," Kox said.

The minister is currently working on a complete overhaul of the law of 25 February 1979 on housing assistance and the housing subsidy system in order to define--among other things-- the concept of "affordability" of housing.

In 2020, 47% of the Fund's homes were intended for sale (in the form of long lease), compared to 53% for rentals. Another feature is that two out of three housing units are built by the country's two main public developers: SNHBM and the Fonds de Logement.

Of the 3,125 projects in 2020, only 5% come from private promoters, the report says. Alongside the projects and their development, the Special Fund made eight land acquisitions for more than 1,300 ares with an estimated potential of 400 additional housing units.

Still, the demographic growth scenario drawn by Statec suggests a need for 5,600 to 7,500 additional housing units per year in Luxembourg. In view of the figures presented, the public offering is one ingredient in the recipe, but certainly not the only one.

This article was originally published in French on Paperjam and has been translated and edited for Delano.