The Luxembourg Real Estate Market in Q1 2026: Review and Perspectives for the New Season

The year 2026 marks a decisive milestone for the residential real estate market in the Grand Duchy of Luxembourg. As the new season begins, professionals and individuals alike are questioning the ongoing dynamics after several seasons of strong fluctuations. On June 25, 2026, the Ministry of Housing and Spatial Planning published an official press release based on the analysis report no. 25 from the Housing Observatory. This comprehensive document, drafted in close collaboration with STATEC, offers a precise overview of the developments observed during the 1st quarter of 2026. The major turbulences seem to be over, and the Luxembourgish market appears to be returning to its economic fundamentals [1].

A Return to Normalcy After Three Years of Strong Variations

To fully understand the figures for this 1st quarter of 2026, it is necessary to recall the recent context. The residential market has just gone through three particularly turbulent years. The most acute phase of the real estate slowdown was concentrated between 2023 and the beginning of 2024. This was followed by a year 2025 marked by a strong recovery, largely stimulated by the announced expiration of several temporary tax measures. These mechanisms had caused significant anticipations of purchases and sales, generating exceptional peaks in activity [1].

Today, report no. 25 clearly indicates that this period of fiscal overheating is over. The real estate market in 2026 is entering a welcome phase of normalization, guided by more solid and rational economic fundamentals. Current transaction volumes, although lower than certain historical peaks, are stabilizing at levels significantly higher than those of the crisis [1].

Transaction Volumes: Existing Properties Overtake New Construction

The detailed analysis of sales volumes reveals a notable divide between the market for existing properties and that of new construction.

The Spectacular Recovery of Existing Properties

On the market for existing housing, activity is displaying robust health with continuous progression over 12 months [1].

Transactions concerning existing apartments jumped by 9.4% compared to the 1st quarter of 2025 [1].
With 968 transactions recorded in the 1st quarter of 2026, this segment is almost returning to its pre-crisis standards. By comparison, the average observed during the first quarters of the period from 2017 to 2021 stood at 1,032 sales [1].
The market for older houses is not left behind, as it recorded 650 sales in the 1st quarter of 2026, representing robust growth of 11.5% over 12 months [1].

The VEFA Segment Still Lagging

Conversely, the market for new construction, or VEFA (Vente en l'État Futur d'Achèvement - off-plan properties), is struggling to get out of the rut. The report highlights that this segment remains significantly more fragile.

Only 207 sales were finalized in the 1st quarter of 2026 [1].
This figure reflects a severe drop of 18.2% compared to the same period in 2025 [1].
Although the Housing Observatory notes a slight improvement compared to the previous quarter, activity remains staggeringly far from the pre-crisis average, where nearly 650 VEFA sales were counted during the first quarters [1].

Selling Prices: A Stabilization Confirmed by STATEC

After the roller coaster of 2025, selling prices for housing in the Grand Duchy are entering a stabilization phase that is reassuring for the local economy [1].

The hedonic index of selling prices, a precise methodological tool calculated by STATEC, shows a development that is now moderate [1]:

The aggregated index increased by only 0.7% compared to the previous quarter [1].
Over a period of 12 months, the rise of this index is limited to 1.7% [1].

This overall progression of 1.7% aligns almost perfectly with inflation. Indeed, the national consumer price index (IPCN) measured inflation at 1.6% between the 1st quarter of 2025 and the 1st quarter of 2026. The increase in real estate value therefore now equals the evolution of the general cost of consumer goods and services [1].

However, significant disparities exist depending on the type of property:

Older houses assert themselves as the flagship product of the market, with prices rising by 3.0% over 12 months, thus outperforming inflation [1].
Existing apartments and apartments under construction (VEFA) are seeing their prices increase much more timidly, with a limited rise of 0.9% over 12 months in both categories [1].

The Rental Market: Persistent and Growing Tensions

While the sales market is normalizing, the Luxembourg rental market, documented in part thanks to data from the Immotop.lu portal, tells a completely different story. Intense pressure continues to be exerted on rents [1].

The Surge in Advertised Rents

Advertised rents for new apartment rental contracts are increasing at a sustained pace:

The progression is 0.5% over the last quarter alone [1].
Over 12 months, the increase reaches a spectacular 4.4% [1].

This increase of 4.4% is massive compared to the general inflation of 1.6% or the increase in selling prices (1.7%). After several years of moderate growth, apartment rentals are clearly entering a new zone of strong tensions [1].

The Appeal of Furnished Rooms and the Protection of Ongoing Leases

The specific segment of furnished room rentals, which accounts for approximately 18% of the total rental supply in Luxembourg, is experiencing even stronger inflation. The indicator for this micro-market jumped by 4.7% over 12 months [1].

It is, however, crucial to differentiate these new advertised rents from the rents currently paid by sitting tenants. STATEC points out that the index for ongoing leases only progressed by 1.4% over the same one-year period, an evolution that is strictly regulated and very close to the 1.6% inflation rate [1].

What to Remember for the New Season in 2026? Practical Implications

Reading this report no. 25 offers crucial lessons for real estate players this season [1].

For Sellers

The timing is favorable, especially if you own an older house. With an appreciation of 3.0% over 12 months, these properties are holding up perfectly and attracting solvent demand, as proven by the 650 recorded sales. For owners of existing apartments, the strategy must be different: the slight price increase (0.9%) indicates that a particularly fair and market-aligned selling price must be set in order to attract buyers [1].

For Buyers

Buyers are now benefiting from a healthier market. The volume of 968 transactions for existing apartments shows that supply is available and deals are being made. The alignment of the price increase (1.7%) with inflation (1.6%) guarantees that valuations are no longer artificially inflated. Furthermore, the struggling VEFA segment, with only 207 transactions, could offer excellent negotiation margins with developers eager to clear their stocks [1].

For Landlords and Investors

Rental investment is shaping up to be very attractive this season. With advertised rents rising by 4.4%, the gross yield upon the creation of a new lease improves, especially since the purchase price of existing apartments only grew by 0.9%. The shared housing and furnished room market is proving to be an extremely high-performing niche, representing 18% of the market and offering record rental growth of 4.7%. However, be careful with long-term management: once the lease is signed, rent progression will be limited to the dynamics of the ongoing lease index, currently measured at 1.4% [1].