Luxembourg real estate market in 2026: key challenges and decisions
Rudolphe ABEN
At the approach of 2026, the Luxembourg real estate market remains in a delicate transition phase. While some transactions have resumed on the existing housing market, new construction remains largely stalled. This gap is fueling growing concern about a lasting imbalance between supply and demand.
At Nextimmo, the analysis of listings, search behavior, and real estate projects highlights a clear reality: the market does not self-regulate spontaneously. The decisions made today will have a direct impact on housing supply, employment, and prices in the years ahead.
Persistently higher interest rates
The main structural factor affecting the market remains the cost of financing. Despite a slight decline, mortgage interest rates are still hovering between 3% and 4%, far from the exceptionally favorable conditions seen before 2022.
This new normal weighs on:
- household purchasing power,
- project profitability for developers,
- buy-to-let investment decisions.
On Nextimmo, we observe longer decision-making timelines and widespread caution. Projects are not disappearing, but they are being postponed while stakeholders wait for a clearer and more stable framework.
A labor market under pressure, including real estate
Another worrying signal is the unemployment rate, which is close to 6%—a historically high level for an economy long accustomed to near full employment. In real estate and construction, the effects are often delayed.
What is not launched today will translate tomorrow into:
- job losses,
- failures across the value chain,
- a lasting weakening of the sector.
Market data confirms that the impact goes far beyond developers and affects the entire real economy.
2024–2025 housing incentives: a buffer, not a recovery
The measures introduced in 2024 and 2025 played a crucial role. They helped prevent a sudden market collapse and maintained a minimum level of activity, particularly in the existing housing segment.
However, the analysis of projects listed on Nextimmo shows that new construction remains largely blocked. Profitability is still insufficient, and many developments are being postponed or canceled.
Without an extension or adaptation of these measures until mid-2026, the scenario is well known: limited construction today, supply shortages tomorrow, and price tensions thereafter.
Risk of a structural shortage in 2026–2027
Real estate operates in long cycles. The decisions taken today will determine the housing supply available in two to three years.
Signals observed on Nextimmo—fewer new developments, concentration of existing supply, and a decline in new project launches—point to a real risk of a structural shortage.
Neighboring countries have understood this logic. Belgium, the Netherlands, and Ireland use real estate as an economic stabilization tool by temporarily supporting supply when the market stalls.
Restarting without imbalance: what the market expects
The debate is not simply about being “for or against” housing incentives. It is about their effectiveness, targeting, and timing.
From the perspective of the market observed by Nextimmo, several expectations clearly emerge:
- simple, temporary, and predictable measures,
- taxation aligned with actual cost structures,
- incentives focused on housing production,
- reduced administrative complexity to accelerate projects.
The goal is not to subsidize indefinitely, but to recreate conditions that encourage investment and construction.
Housing as an essential economic infrastructure
At the heart of the debate lies a fundamental question: is housing a cost or an infrastructure?
Real estate data shows that a blocked market triggers cascading effects—slower investment, social tensions, and reduced economic attractiveness. Conversely, relaunching supply helps stabilize prices over the long term, preserve jobs, and ensure residential mobility.
Conclusion: Nextimmo’s role in a changing market
As 2026 approaches, the Luxembourg real estate market stands at a turning point. Decisions made today will shape tomorrow’s supply, prices, and level of activity.
In this context, Nextimmo plays a key role by providing transparent market insights, centralizing listings, analyzing real dynamics, and efficiently connecting real estate stakeholders in Luxembourg.
Because a healthy market starts with clear, accessible information grounded in real-world data.
To learn more about how Nextimmo supports professionals and individuals in searching, listing, and analyzing real estate in Luxembourg, visit nextimmo.lu.