Authored by the expert who managed and guided the team behind the Luxembourg Property Pack
Yes, the analysis of Luxembourg City's property market is included in our pack
As we reach mid-2025, Luxembourg City's property market shows signs of stabilization after a correction period, with prices currently averaging €11,815 per square meter.
The market experienced a 5.19% year-on-year decrease from May 2024 to May 2025, but recent ECB interest rate cuts and government incentives are supporting a measured recovery. Despite the recent correction, Luxembourg City remains one of Europe's most expensive property markets, driven by persistent supply constraints and strong demand from international workers and cross-border commuters.
If you want to go deeper, you can check our pack of documents related to the real estate market in Luxembourg, based on reliable facts and data, not opinions or rumors.
Property prices in Luxembourg City are stabilizing after a correction, with moderate price increases expected through 2026 as ECB rate cuts improve financing conditions.
The market is transitioning from decline to recovery, supported by strong fundamentals including population growth, limited supply, and sustained foreign investment interest.
| Indicator | Current Status (June 2025) | Trend |
|---|---|---|
| Average Price per m² | €11,815 | -5.19% YoY |
| Most Expensive Neighborhood | Belair (€14,308/m²) | Stable |
| ECB Deposit Rate | 2.00% | ↓ from 4.00% |
| Mortgage Rates | 3.5-4.5% | Declining |
| Population Growth | +1.5% annually | Steady |
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
What are the current average property prices in Luxembourg City as of June 2025?
Property prices in Luxembourg City currently average €11,815 per square meter, reflecting the market's position after a period of correction.
As of May 2025, residential properties in Luxembourg City show significant variation by neighborhood, with prices ranging from €9,018/m² in Beggen to €14,308/m² in Belair. The city center maintains its premium status with average prices well above the national average of €8,201/m².
The rental market remains robust with average rates at €34.45 per month per square meter, up 4.90% year-on-year. This indicates continued strong demand in the rental sector despite the sales market correction.
Recent data shows that while prices have declined from their March 2024 peak of €12,630/m², the market is showing signs of stabilization. Transaction volumes have started to recover, particularly for existing apartments and VEFA (sales in future state of completion) properties.
It's something we develop in our Luxembourg property pack.
How much have property prices changed in Luxembourg City over the past year?
Luxembourg City's property market experienced a 5.19% year-on-year decline from May 2024 to May 2025, marking a significant correction after years of rapid growth.
This correction follows an extended period of price increases, with properties having risen approximately 70% over the past five years. The recent decline represents a healthy market adjustment rather than a crash, as prices stabilize at more sustainable levels while remaining among Europe's highest.
Quarter-on-quarter data for early 2025 shows prices stabilizing or even increasing slightly, with Q1 2025 seeing a 1.62% quarterly increase. This suggests the correction phase may be ending, particularly as ECB interest rate cuts begin to improve financing conditions.
Different property types experienced varying degrees of price adjustment. New apartments showed more resilience with only a 2.3% decline in Q1 2024, while existing apartments saw steeper corrections. Energy-efficient properties (Class A and B) maintained their value better than less efficient buildings.
The price correction has been uneven across neighborhoods, with premium areas like Belair and Limpertsberg showing more stability compared to peripheral districts.
Which Luxembourg City neighborhoods are seeing the biggest property price increases in 2025?
Despite the overall market correction, certain Luxembourg City neighborhoods are showing resilience and even price growth, particularly those with major development projects.
Cloche d'Or and Gasperich emerge as the hottest growth areas, driven by massive infrastructure investments, new business districts, and the relocation of major companies. These areas benefit from the new shopping center, improved tramway connections, and the French campus of Vauban school, attracting young professionals and families.
Grund and Clausen are experiencing renewed interest from buyers seeking historic charm combined with modern amenities. These districts offer unique character properties and vibrant social scenes, appealing to a growing demographic that values lifestyle over pure convenience.
| Neighborhood | Average Price/m² (2025) | Key Growth Drivers |
|---|---|---|
| Belair | €14,308 | Premium location, limited supply |
| Cloche d'Or | €12,500-13,000 | Major development, business hub |
| Gasperich | €11,000-12,000 | Infrastructure, shopping center |
| Kirchberg | €11,500-12,500 | Business district, EU institutions |
| Grund | €10,000-11,000 | Historic charm, lifestyle appeal |
Cessange is emerging as a value proposition, benefiting from its proximity to Cloche d'Or while offering more affordable prices. The district is seeing increased development activity and improved transport links.
What types of properties are experiencing the strongest demand in mid-2025?
Energy-efficient properties lead the market, with Class A homes commanding premium prices and experiencing the strongest demand from both buyers and renters.
Tech-smart apartments with modern amenities and high energy performance ratings are particularly sought after. Properties with A or B energy ratings averaged €9,547/m² for Class A versus €7,156/m² for Class G properties in late 2023, a trend that has intensified in 2025.
Family-sized suburban homes with outdoor spaces have seen increased demand following the pandemic, with properties featuring gardens commanding 12% premiums and those with balconies 8% more than comparable units without outdoor space.
Compact urban apartments in well-connected neighborhoods remain popular among young professionals and investors, particularly those near tramway stops and major employment centers. These properties offer strong rental yields and consistent tenant demand.
Luxury units in prime areas continue to attract foreign buyers and high-net-worth individuals, especially properties combining historic charm with modern renovations in neighborhoods like Belair and Limpertsberg.
How are the recent ECB interest rate cuts affecting Luxembourg City's property market?
The ECB's June 2025 rate cut to 2.00% marks the eighth reduction since June 2024, significantly improving financing conditions for property buyers.
This monetary easing has already sparked a recovery in transaction volumes, with existing apartment sales surging 51% and VEFA transactions up 38% in 2024. The improved financing conditions are making mortgages more affordable, with rates dropping from peaks above 5% to current levels around 3.5-4.5%.
Banks remain selective in their lending practices, but the lower rates have expanded purchasing power for qualified buyers. The combination of lower rates and recent price corrections has improved affordability metrics, though Luxembourg City remains expensive by European standards.
Market participants expect the positive impact to continue through 2025, with transaction volumes likely to increase further as confidence returns. However, the ECB has hinted at a potential pause in rate cuts, suggesting the most dramatic improvements in financing conditions may be behind us.
It's something we develop in our Luxembourg property pack.
What are the current mortgage rates for property buyers in Luxembourg City?
Mortgage rates in Luxembourg have declined significantly from their 2023 peaks, currently ranging from 3.5% to 4.5% for standard residential loans.
Fixed-rate mortgages for 20-30 year terms now average around 3.67% according to recent data, down from peaks above 5% in 2023. Variable rates, while less popular than during the low-rate era, have also decreased following ECB policy changes.
Banks offer preferential rates for energy-efficient properties (A or B rated), with discounts of 0.25-0.50% common. High-income borrowers with substantial down payments can negotiate rates at the lower end of the range, particularly for properties in prime locations.
| Loan Type | Current Rate Range | Typical Terms |
|---|---|---|
| Fixed Rate (10 years) | 3.25-3.75% | 80% LTV maximum |
| Fixed Rate (20-30 years) | 3.50-4.25% | 90% LTV for residents |
| Variable Rate | 3.00-3.50% | Lower initial rates |
| Green Mortgage | 3.00-3.75% | For A/B rated properties |
Luxembourg's mortgage market features unique characteristics including high loan-to-value ratios (up to 90% for residents) and long repayment terms, though banks have tightened lending criteria since 2022.
How is foreign investment impacting Luxembourg City property prices in 2025?
Foreign investment remains a significant driver of Luxembourg City's property market, though transaction volumes declined 44.6% in 2023 as international buyers adopted a wait-and-see approach.
Luxembourg maintains no restrictions on foreign property ownership, making it attractive for international investors. Foreign buyers particularly target luxury properties in prime neighborhoods like Belair, Kirchberg, and the emerging Cloche d'Or district, often paying premium prices for high-end units.
The influx of international financial institutions continues, with over 60 financial firms establishing operations in Luxembourg as of 2025. This corporate migration drives demand for both commercial and residential properties, as expatriate employees seek housing near business districts.
Cross-border workers from France, Germany, and Belgium significantly impact the market, with over 226,000 daily commuters as of late 2023. Many are increasingly choosing to relocate to Luxembourg, intensifying competition for housing in accessible neighborhoods.
Government policies aim to balance foreign investment with local affordability, including new levies on empty properties starting in 2025 to discourage speculative holding and increase available housing stock.
What role do cross-border workers play in Luxembourg City's housing demand?
Cross-border workers constitute a massive force in Luxembourg's economy, with over 226,000 daily commuters significantly influencing housing demand patterns.
The continuous influx of cross-border workers, attracted by Luxembourg's strong job market and higher salaries, creates persistent demand pressure, particularly for rental properties in well-connected areas. Major business districts like Gasperich and Kirchberg see especially strong demand due to their concentration of international companies.
Many cross-border workers are increasingly choosing to relocate to Luxembourg permanently, driven by commute fatigue and improved quality of life. This shift from commuting to residing adds thousands of potential buyers and renters to an already tight market annually.
Areas with good transport connections to neighboring countries, such as properties near major highways and future tramway extensions, command premium prices. The planned high-speed tramway linking Luxembourg City to Esch-sur-Alzette by 2030 is already influencing property values along the route.
The housing shortage in southern Luxembourg is particularly acute due to cross-border demand, with new construction unable to keep pace despite ongoing development projects in areas like Belval and Esch-sur-Alzette.
What are the property price forecasts for Luxembourg City through 2026?
Property prices in Luxembourg City are expected to increase moderately by 3-7% through 2026, driven by improving financing conditions and persistent supply constraints.
Expert consensus suggests the current stabilization phase will transition to renewed growth as ECB rate cuts stimulate demand and transaction volumes recover. The combination of limited land availability, strict planning regulations, and continued population growth supports upward price pressure.
Major development projects including Cloche d'Or's completion and Kirchberg's northern expansion will add thousands of units by 2027, but demand is expected to absorb this supply quickly. The Laangfur and Kuebebierg districts represent the capital's last major land reserves for development.
Government measures including reduced registration fees (3.5% instead of 7%) and the extended Bëllegen Akt tax credit through mid-2025 are designed to support market recovery while improving affordability for first-time buyers.
Long-term projections to 2030 suggest continued moderate growth, with prices in central districts likely to appreciate faster than peripheral areas due to scarcity and sustained international demand.
Get fresh and reliable information about the market in Luxembourg City
Don't base significant investment decisions on outdated data. Get updated and accurate information with our guide.
How does Luxembourg City's supply shortage affect property prices?
Luxembourg City faces a structural housing shortage with annual demand for 5,600-7,500 new units far exceeding actual construction of around 4,500 units annually.
Limited land availability represents the core constraint, with Luxembourg City having exhausted most developable areas except for northern Kirchberg and planned districts like Laangfur. Private ownership of most remaining land and low property taxes discourage owners from selling or developing, creating artificial scarcity.
Construction sector capacity constraints compound the issue, with labor shortages and rising costs slowing project completion. The pandemic exacerbated these problems, with 60% of construction firms reporting labor as a major obstacle to growth.
Despite high prices, new construction has actually declined, with building permits down 17.8% in Q1 2024 nationally, though Luxembourg City bucked this trend with a 28.5% increase. The mismatch between permit approvals and actual completions suggests bureaucratic and financial hurdles remain significant.
The supply shortage ensures continued upward price pressure even during market corrections, as pent-up demand quickly absorbs any increase in available properties. This dynamic makes significant price declines unlikely without major policy interventions.
What economic factors are driving Luxembourg City's property market in 2025?
Luxembourg's robust economy, with projected GDP growth of 1.46% in 2025 accelerating to 3% in 2026, provides a solid foundation for property market recovery.
Population growth remains a key driver, with a 1.5% annual increase adding nearly 10,000 residents yearly. The positive migration balance of +10,376 in 2024, combined with 47.3% of the population being foreign nationals, ensures continuous housing demand.
Low unemployment at 5.53% projected for 2025 and strong wage growth supported by Luxembourg's indexation system maintain household purchasing power. The financial sector's resilience and expansion of EU institutions provide stable, high-paying employment.
| Economic Indicator | 2025 Forecast | Impact on Property Market |
|---|---|---|
| GDP Growth | 1.46% | Moderate positive |
| Inflation | 1.6% | Neutral to positive |
| Unemployment | 5.53% | Positive (low rate) |
| Population Growth | +1.5% | Strong positive |
| Interest Rates | Declining | Strong positive |
Government fiscal measures including infrastructure investment and support for the construction sector are expected to boost economic activity and housing development through 2025-2026.
It's something we develop in our Luxembourg property pack.
Will Luxembourg City property prices continue rising long-term?
Long-term fundamentals strongly support continued price appreciation in Luxembourg City, though at more moderate rates than the 70% increase seen over the past five years.
Structural factors including severe land constraints, Luxembourg's role as an EU financial center, and projected population growth to over 1 million by 2050 ensure persistent demand pressure. The concentration of high-paying jobs and international institutions makes Luxembourg City particularly resilient to economic downturns.
Expert analysis suggests the recent correction represents a healthy adjustment rather than a trend reversal. The market is transitioning to a "more rational, selective, and resilient phase" with quality, location, and energy efficiency becoming key differentiators.
Risks include potential regulatory changes to cool the market, global economic uncertainties, and the challenge of maintaining Luxembourg's competitiveness if housing becomes prohibitively expensive. However, government commitment to infrastructure development and affordable housing programs aims to support sustainable growth.
The consensus view projects moderate annual price growth of 3-5% through 2030, with premium neighborhoods and energy-efficient properties outperforming. Unless supply constraints are dramatically eased through policy changes, upward price pressure will remain a defining characteristic of Luxembourg City's property market.
We made this infographic to show you how property prices in Luxembourg compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It's an easy way to spot where you might get the best value for your money. We hope you like it.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Luxembourg City's property market in June 2025 shows clear signs of stabilization and nascent recovery after a necessary correction period. While prices remain 5.19% below their 2024 peaks, the combination of ECB rate cuts, government support measures, and fundamental supply-demand imbalances points toward resumed growth.
The answer to whether property prices are going up in Luxembourg City is: Yes, moderately. After the recent correction, prices are expected to increase by 3-7% through 2026, driven by improving financing conditions, persistent housing shortages, and continued strong demand from both local and international buyers. The market has shifted from rapid appreciation to more sustainable growth, making it a more balanced environment for both buyers and sellers.
Sources
- IMMOTOP.LU - Luxembourg City Property Prices
- Spuerkeess - Luxembourg Property Market Analysis
- Chronicle.lu - Q1 2025 Property Price Report
- Trading Economics - Luxembourg Housing Index
- European Central Bank - June 2025 Rate Decision
- NextImmo - Luxembourg Real Estate 2025 Outlook
- Global Property Guide - Luxembourg Market Analysis
- Chambers - Luxembourg Real Estate 2025
- Investropa - Luxembourg Real Estate Forecasts
- Statista - Luxembourg Real Estate Market Forecast