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  • Writer's pictureLuxRelo

How Luxembourg’s Housing Crisis Could Threatens Its Future

Housing Market Luxembourg

Luxembourg is a small country with a big problem: it does not have enough affordable housing for its growing population. The Grand Duchy, which has a land area of only 2,586 square kilometers and a population of about 630,000, is facing a major housing crisis that affects its economy, society and environment.

According to the latest data from Eurostat, Luxembourg has the highest house price growth rate in the European Union, with an increase of 16.7% in the second quarter of 2023 compared to the same period in 2022. The average price of a house in Luxembourg is around 1.2 million euros, while the average rent for a two-bedroom apartment is around 2,000 euros per month. These prices are out of reach for many residents, especially young people, low-income earners and immigrants.

The housing crisis is driven by several factors, such as the limited supply of land and housing units, the high demand from both domestic and foreign buyers, the low interest rates and tax incentives that encourage speculation and investment, and the lack of social and affordable housing policies. The crisis has also been exacerbated by the COVID-19 pandemic, which has increased the demand for larger and more comfortable living spaces.

The consequences of the housing crisis are manifold and serious. Many people are forced to live in overcrowded or substandard conditions, or to commute long distances from neighboring countries such as France, Belgium and Germany, where housing is cheaper but less accessible. This affects their quality of life, health and well-being, as well as their social integration and participation. The housing crisis also contributes to social inequality, segregation and exclusion, as well as to environmental degradation and climate change due to urban sprawl and increased car use.

The government of Luxembourg has recognized the urgency of the situation and has taken some measures to address it, such as increasing the supply of public land and housing units, regulating the rental market and promoting social and cooperative housing models. However, these measures are not enough to meet the current and future needs of the population, especially in light of the projected demographic growth and economic development of the country.

Therefore, more radical and comprehensive solutions are needed to tackle the housing crisis in Luxembourg. These include:

  • Reforming the tax system to discourage speculation and investment,

  • Implementing a national housing strategy that ensures adequate and affordable housing for all,

  • Fostering urban planning and design that promotes compact and mixed-use development,

  • Enhancing public transport and mobility options that reduce car dependency,

  • Engaging all stakeholders in a participatory and inclusive process that respects the rights and interests of all residents.

Luxembourg is a small country with a big potential. It has a diverse and multicultural society, a dynamic and innovative economy, and a rich and beautiful natural environment.

However, it also faces a big challenge: how to ensure that everyone can enjoy a decent and dignified home in a sustainable and livable city. This challenge requires vision, courage and action from all actors involved. The future of Luxembourg depends on it.

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