atHome Magazine: Price stagnation in sight?

What the experts say: Tensions in the market

In the year 2022, two phenomena are coming together and leading to a strong tension on the real estate market:

• The post-Covid recovery had led to a rise in material prices in the face of very strong global demand;
• The war in Ukraine is currently disrupting supply chains and leading to further increases in material, transport and energy prices.

As a result,materials prices have increased from 15% to 20% since the start of the war in Ukraine. This mainly concerns steel, concrete, tiles and wood. They should continue to rise in the coming months.

What the experts say: "Prices will continue to rise, but at a slower pace".

Faced with a still very strong demand on the market, one of the main problems is the supply of housing, which is itself blocked by the supply of land.

"The cost of owning land is very low in Luxembourg", explains Julien Licheron, researcher at LISER (Observatoire de l'Habitat). "Our challenge is to mobilise land"he continues.

Clearly, a lot of building land is available. But they are held by owners who have no tax incentive to sell them. Thus, little housing is being built. Prices are rising.

For Julien Licheron, the recent drop in demand will not be significant enough to reverse the price curve. He adds: "House prices will continue to rise, but at a slower pace than before.