State of the Real Estate Market in the First Quarter of 2024: Summary and Trends
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Rudolphe ABEN
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The Housing Observatory has just published its 10th analysis report, providing a comprehensive overview of the residential real estate market in the first quarter of 2024. Here are the key points:
A Still Weak Sales Market
The real estate transaction market remains sluggish, especially for new constructions. The sales volume is significantly lower than the levels seen before the late 2022 housing crisis. In the first quarter of 2024, only 92 sales were recorded, representing a 47.1% drop compared to the same period in 2023, and seven times fewer than the average of previous years (2017-2022).
Sales of apartments under construction have not been offset by purchases from the State or the City of Luxembourg, despite their announced acquisitions of projects from private developers. However, sales of existing apartments have slightly rebounded with a 24.5% increase compared to the first quarter of 2023, although activity remains below the pre-crisis average.
Stabilization of Sale Prices
Sale prices are beginning to stabilize. The hedonic price index provided by Statec shows a minimal variation of -0.3% between the fourth quarter of 2023 and the first quarter of 2024, after a 10.9% drop over the previous year. This stabilization trend is observed in both apartments and existing houses, the latter having lost 14.7% of their value compared to the first quarter of 2023.
Prices of apartments under construction (VEFA) also fell by 2.3% this quarter compared to the fourth quarter of 2023. However, fluctuations in this segment remain volatile due to the low number of transactions.
Stable Rents
After several quarters of significant increases, rents for apartments with new leases have stabilized since the second quarter of 2023. Over the past 12 months, rents have only increased by 1.5%, a rise lower than the consumer price index (+3.2%) over the same period. This moderation is likely due to tenants' inability to absorb large rent increases despite growing rental demand.
A notable exception is rents for furnished rooms, which currently represent 15% of the total rental offer, having increased by 4.5% compared to the first quarter of 2023, well above the inflation rate for consumer goods.