Luxembourg needs between 7,500 and 8,000 new homes annually to solve the problems the country faces in the housing market, according to the Housing Observatory.
During a parliamentary hearing, the Observatory’s experts stressed the price of housing in the Grand Duchy has increased by an average of about 4.4% per year since 2010.
In 2015/2016, prices rose 5.6%, due mainly to the VAT increase in 2015, revealed at the hearing requested by the CSV party.
According to the Housing Observatory, the strong population growth of recent years, around 100,000 new inhabitants per year over the last decade, coupled with stable economic growth, low interest rates and favourable credit conditions are the main reasons for the steady rise in prices.
The supply of housing being inadequate to demand also ‘inflates’ housing prices in the country.
One of the problems faced by the sector is the difficulty of gaining land to build houses and apartments.
According to the observatory, there are about 2,719 hectares of land “theoretically” available for construction. About 92% of this area belongs to private owners.