Q2 2024: prices set to stabilise?

The downward trend in advertised selling prices is slowing sharply. The following observations can be made at the end of the 2nd quarter of 2024:

• Advertised prices seem to be stabilising (-3.8% compared with -9.3% in the previous quarter)
• Rents back on the rise across the countryafter 2 quarters of relative stabilisation
• Rates start to fall: This is the first time in 5 years that the ECB has decided to cut its key rates.

To put it plainly: rents are rising, interest rates are falling and it is still possible to negotiate a good sale price. This could be a good time to buy.

Advertised sales prices: the downward trend has been sharply curbed

The second quarter of 2024 saw a further fall in sales pricesbut with less intensity than in the previous quarter. The national average shows a decline of -3.8%, compared with -9.3% in the first quarter of 2024. This trend affected the whole of Luxembourg, although there were some notable regional disparities

Flats (-3.3%) seem to be holding up better than houses (-4.9%), reversing the trend seen at the start of the year. The trend for existing (-3.7%) and new (-4.1%) properties is similar, confirming a general downward trend.

Here are the detailed price trends for Q2 2024 compared with Q2 2023:

• Centre: €9,816 per square metreThe average fall was -2.4%. Flats saw an adjustment of -2.1%, while houses saw a fall of -3.3%.
• North: €5,783/sq.m. The region recorded the smallest fall, with an average of -0.6%. It is worth noting that flats in the region recorded an increase of +2.1%, offset by a fall of -3.3% for houses.
• South: €6,427/sq.m. Prices showed the sharpest fall, at -6.1%. Flats fell by -6.4%, closely followed by houses at -5.6%.
• East: €6,856/sq.mwith an adjustment of -2.5%. Flats held up well with a slight rise of +0.9%, while houses fell by -5.6%.
• West: €7,227/sq.mThe most significant adjustment was -6.6% on average, with -6.3% for flats and -7.0% for houses.

An analysis of price trends by quarter shows a gradual slowdown in the decline since the peak observed in the third quarter of 2023. This trend could herald a stabilisation of the market in the months ahead.

Rents: an unexpected rebound

Contrary to forecasts of stabilisation, the rental market experienced a significant rebound in the second quarter of 2024. The national average for rents rose by +3.71TP3Q, marking a turnaround from the stabilising trend seen at the start of the year.

This increase concerns both flats (+3.9%) and houses (+1.5%), although the latter show a more moderate rise. This could be explained by a renewed interest in renting, possibly due to the continuing uncertainty on the buy-to-let market.

Details of average rents and their annual change by region :

• Centre: €2,143This represents a moderate increase of +1.3%. Flats rose by +1.6%, while houses fell by -2.8%.
• North: €1,473Rents rose significantly, by 5.91TP3Q, for both flats and houses.
• South: €1,687with the strongest growth at +8.4%. Flat rents rose by +8.6%, and house rents by +6.1%.
• East: €1,918with an increase of +5.2%. Flats saw a notable increase of +7.2%, contrasting with a slight fall for houses to -1.2%.
• West: €2,169with the biggest increase at +9.6%. Flats rose by +9.9%, and houses by +8.8%.

Outlook for the second half of 2024

The Luxembourg property market appears to be entering a phase of transition. The deceleration in the fall in sales prices could be the start of a gradual stabilisation, while the rebound in rents raises questions about the balance between buying and renting.

A number of factors could influence market trends over the coming months:

• The impact of the interest rate cuts introduced in May 2024 (following the cut in key ECB interest rates) could be felt more strongly, potentially stimulating the buying market.
• Developments in the economic situation, particularly the unemployment rate and GDP growth, will play a crucial role in the confidence of buyers and investors.
• Government measures, in particular the tax incentivescould continue to support the market.
• The market recovery forecast for 2025 is still on track, but the second half of 2024 could already show encouraging signs of stabilisationand even a slight recovery in some segments.