Are Luxembourg rents still increasing?

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What is the current average rent price in Luxembourg for apartments and houses?

Luxembourg's rental market commands some of Europe's steepest prices, with apartments in Luxembourg City averaging €34.49 per square meter per month as of September 2025.

For apartments, expect to pay between €1,800 and €2,200 monthly for a one-bedroom unit in the city center. Outside central areas, prices typically drop to more manageable levels, though still remain high by European standards.

Houses command even higher rents, with the average monthly rental exceeding €3,100 across the country. These prices reflect Luxembourg's position as a major financial center and its chronic housing shortage.

In less central regions, rental costs can decrease to €18-21 per square meter, offering some relief for those willing to commute to Luxembourg City for work.

It's something we develop in our Luxembourg property pack.

How have rent prices in Luxembourg changed over the last year?

Luxembourg's rental market experienced steady upward pressure over the past year, with rents in the municipality of Luxembourg rising by 2.77% from August 2024 to August 2025.

The broader city area saw an even more pronounced increase of 4.9% year-on-year, demonstrating the continued strength of rental demand. Despite some quarterly fluctuations, including a slight 0.8% decrease in advertised apartment rents in Q1 2025, the overall annual trend remained positive with a 1.5% year-over-year increase.

These increases occurred against a backdrop of limited new supply and sustained demand from both local residents and international workers drawn to Luxembourg's thriving financial sector.

The rental market has shown remarkable resilience, with prices generally trending upward over longer time frames, punctuated only by occasional plateauing or minor dips between quarters.

Are there any specific areas in Luxembourg where rents have increased more than others?

Rent increases across Luxembourg have varied significantly by location, with central high-demand neighborhoods experiencing the steepest climbs.

Premium areas like Pulvermuhl now command over €51 per square meter, while Belair has also seen substantial increases. These neighborhoods benefit from their proximity to financial district offices and superior amenities.

Regional data shows the Centre region experienced a 4.4% annual rent increase for apartments, while the West region actually saw a 4.2% decrease, highlighting the geographic disparities in the market.

The most affordable rents remain in areas like Pfaffenthal, where prices average €25.45 per square meter, though even these "budget" options exceed rental costs in many neighboring countries.

What is the vacancy rate in Luxembourg's rental market?

Luxembourg's rental market operates with extremely low vacancy rates, traditionally hovering around 2-3% or below, reflecting the country's severe housing shortage.

This tight supply situation creates a landlord's market where available properties are quickly absorbed, often within days of listing. The low vacancy rate contributes significantly to upward pressure on rental prices.

Recent detailed national vacancy rate data remains limited, but market indicators suggest the situation has not meaningfully improved, with continued high demand and constrained supply.

The combination of low vacancy rates and rapid absorption of new rental properties means tenants often face limited choice and must act quickly when suitable properties become available.

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Are there any new housing developments or projects in Luxembourg that could affect rent prices?

New housing developments in Luxembourg are slowly returning to the market as conditions correct from previous highs, though the pace remains insufficient to address the underlying supply shortage.

Recent construction activity has increased modestly, with developers responding to sustained demand and supportive government policies. However, the lengthy permitting processes and stringent zoning regulations continue to constrain the speed of new supply delivery.

These new developments could help stabilize or slightly moderate rent increases if supply meaningfully increases, but the market remains fundamentally tight with rapid absorption of new units.

Local efforts to boost social and affordable housing are underway but have not yet reached sufficient scale to meaningfully impact general market rents.

The overall effect of new developments on rental prices is expected to be limited in the near term, given the substantial pent-up demand and continued population growth.

How does the rent increase in Luxembourg compare to the overall inflation rate in the country?

Luxembourg's rental price increases significantly outpaced both local and European inflation rates in 2025, highlighting the unique pressures facing the housing market.

With rent increases of 2.77-4.9% annually, Luxembourg's rental inflation exceeded the EU average rent inflation of 3.2% and substantially surpassed the country's headline Consumer Price Index, which rose approximately 1.8-2.0% in recent quarters.

This divergence indicates that housing costs are rising much faster than general prices, creating affordability challenges for both local residents and international workers.

The disparity between rental inflation and general inflation reflects the structural supply-demand imbalances in Luxembourg's housing market, which operate independently of broader economic price trends.

Is there a noticeable difference in rent prices for furnished versus unfurnished apartments in Luxembourg?

Furnished apartments in Luxembourg command a substantial premium over their unfurnished counterparts, typically 15-30% higher than similar unfurnished units.

This premium is particularly pronounced in areas with high concentrations of expatriate workers and for short to medium-term rental arrangements, where international professionals are willing to pay extra for move-in-ready accommodations.

The furnished rental market benefits from strong demand from the financial sector's international workforce, who often relocate temporarily and prefer the convenience of fully equipped apartments.

For investors and landlords, offering furnished properties can significantly boost rental yields, though it requires higher upfront investment and ongoing maintenance of furnishings and appliances.

How do rent prices in Luxembourg compare to nearby countries like Belgium, France, or Germany?

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Luxembourg versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

Are rents in Luxembourg expected to continue increasing in the next 6 months?

Luxembourg rents are expected to stabilize or rise modestly by 1-3% over the next six months, reflecting continued supply shortages balanced against gradual improvements in new housing supply.

The most sought-after districts will likely see the upper end of this range, while areas with new developments may experience more moderate increases or even temporary stabilization.

Market analysts anticipate that severe shortages in prime locations will continue to limit any broad-based slowdown in rental growth, even as new construction activity gradually increases.

The presence of new builds may moderate increases in some zones, but the overall trajectory remains upward given the fundamental supply-demand imbalance and continued economic growth attracting new residents.

It's something we develop in our Luxembourg property pack.

How does the size of an apartment impact the rent increase trends in Luxembourg?

One-bedroom apartments experienced the sharpest rent increases due to exceptionally high demand from single professionals and expatriate workers relocating to Luxembourg's financial sector.

Three-bedroom and larger units saw more moderate increases but remain expensive when available, reflecting their relative scarcity and appeal to families willing to pay premium prices for space.

The differential in rent increases typically favors smaller units, which attract the broadest demand base including young professionals, recent graduates, and temporary residents.

Studio and one-bedroom apartments benefit from Luxembourg's role as a financial hub, where international workers often initially seek compact, convenient accommodation near their workplaces.

Larger family-sized apartments face different dynamics, with increases moderated by the smaller pool of potential tenants but supported by their absolute scarcity in prime locations.

What are the main factors driving rent increases in Luxembourg?

Chronic undersupply of new housing stands as the primary driver of Luxembourg's rental price increases, with construction failing to keep pace with demand for over a decade.

High population growth, sustained immigration, and the concentration of international businesses create continuous upward pressure on the rental market. Luxembourg's status as a major financial center attracts highly paid professionals who can afford premium rents.

Stringent zoning regulations and lengthy permitting processes severely constrain new development, preventing the market from naturally correcting supply imbalances through increased construction.

Price resilience in central neighborhoods reflects their desirability and proximity to major employment centers, creating a self-reinforcing cycle where limited supply meets concentrated demand.

The combination of international demand, regulatory constraints, and geographic limitations creates a perfect storm for sustained rental price appreciation.

How do local government policies or regulations influence rent prices in Luxembourg?

Luxembourg's rent control and regulation framework exists but proves limited in effectiveness due to various loopholes and the creation of new tenancies that fall outside existing controls.

Recent government initiatives include tax incentives for developers and interest rate adjustments to encourage building, though these measures have little immediate effect on current rental prices due to construction lead times.

Zoning laws and planning restrictions significantly impact supply by limiting where and how quickly new housing can be developed, indirectly supporting higher rents through constrained supply.

Social housing initiatives and affordable housing programs are expanding but remain insufficient in scale to meaningfully reduce pressure on the general rental market.

It's something we develop in our Luxembourg property pack.

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.

Sources

1. LuxToday - Impact of Remote Working on Luxembourg Rental Market 2025
2. ImmoTop - Luxembourg Real Estate Prices
3. InvestRopa - Luxembourg City Price Forecasts
4. VisitWorld - Cost of Living in Luxembourg 2025
5. NextImmo - Buy or Rent Property in Luxembourg 2025
6. AtHome - Luxembourg Real Estate Market Outlook 2025
7. Expatica - Cost of Living in Luxembourg
8. Chronicle.lu - Luxembourg Housing Market Q1 2025