Luxembourg Residential MarketView Q1 2024

OUTLOOK

2023 was a challenging year for the residential sector across the Grand Duchy. Financing costs continued to increase, and the economy experienced a recession. Given the latest forecasts, however, market experts see a return to growth in 2024 with metrics still very-well supported over the long-term.

Additionally, the government announced measures to support the construction sector and broad residential market in 2024. Buyers for own use (and investors in many cases) can benefit from incentives such as an expanded tax credit on notarial deeds and deductible interest expense, capital gains tax and depreciation reform. Renters may be eligible for an increased subsidy, especially those with children.

For the construction sector, the measures will strengthen the program of new construction acquisition for the state's affordable housing stock and expand the creation of new affordable housing. Since the beginning of 2024, there have been signs of a timid recovery in the residential sector. Demand for goods for sale across all categories is returning. We also note a strong interest in new properties at a more or less advanced stage of construction where the delivery date is known.

This recovery demonstrates that buyers have now become aware of the new reality of the market and that they are gradually regaining confidence in its various players. The year 2024 will be marked by a gradual recovery with a more significant return to growth expected in 2025.