The Luxembourg real estate market in the first quarter of 2024 shows a significant trend of price adjustment compared to 2023. This development affects all regions of the country, with a general decrease in prices of about -9.3%.
Sale Price and Interest Rates
Sale prices in the Luxembourg real estate market continue to adjust, stimulating renewed activity in real estate transactions. After hovering around 4.5% to 5%, interest rates have seen a significant decline. This is a first since the onset of the crisis in 2022. Recent observations from atHome Finance reveal rates ranging between 3.5% and 3.8%.
Central Banks and financial institutions in Luxembourg anticipate several further declines in the coming months. This could accelerate the expected recovery of the real estate market by 2024-2025.
Importance of Energy Passport
The energy passport of a real estate property plays an increasingly crucial role in determining interest rates by banks. Properties with high-performance energy passports (A, B) generally benefit from preferential interest rates compared to other properties in the market.
Some banks also offer a reduction in interest rates if buyers undertake energy renovation works altering the energy class of their property.
Evolution of Rental Prices
After a period of strong increases in 2023, the rental market shows signs of stabilization. The rise in rents, has significantly slowed down in the first quarter of 2024, with the national average increase not exceeding +1.7%.
However, this moderation manifests differently depending on the types of properties. Apartment rents for example show an increase of +2.5%, while house rents experience a decrease of -6.2%.
Overall, the first quarter of 2024 marks a pivotal moment for the Luxembourg real estate market. It has been characterized by price adjustments, evolving interest rates, and a shifting rental landscape. As financing conditions improve and energy efficiency gains importance in property valuations, buyers and investors are finding new opportunities in the market. Looking ahead, continued rate adjustments and regulatory incentives could further stimulate activity, setting the stage for a more dynamic real estate environment in 2024 and beyond.
