Disclaimer
The following article is an opinion piece by the respective author and does not necessarily reflect the position of the FOKUS. party. We stand for diversity of discussion and therefore consider it important to give other opinions the space they deserve.
Luxembourg’s long journey to the housing crisis
Housing crisis? The main thing is that the balcony is photogenic.
Our politicians love balconies – especially those that are perfect for a photo. New projects are proudly presented, freshly built, with enough space for several ministers to stand on them at the same time and look smilingly into the cameras. These projects are then sold as great innovations for the future of housing. Meanwhile, VEFA remains the buzzword of the moment – apartments that exist on plans and shine in brochures. Families and young people, on the other hand, are still looking for something much more mundane: affordable housing. Many end up finding them not in Luxembourg, but across the border.
The rocketing real estate prices in Luxembourg
The figures tell a simple story – and it is surprisingly consistent.
In other words: In just under a decade and a half, the price of an average apartment has more than doubled.
If you bought back then, you have an excellent investment today.
If you want to buy today, you need an excellent bank first and foremost.
In political terms, this development is also remarkably stable. For much of this period, ministers from the CSV or DP were at the helm of housing policy. Governments changed, coalitions changed, programs were introduced – but one thing remained constant: rising prices.
This points to a particular strength of Luxembourg politics: short-term thinking with impressive long-term results. While prices per square meter continue to climb to new heights, the political rhetoric remains surprisingly unchanged. For decades, we have been hearing the same sentence, in an almost identical tone of voice: “We will create affordable housing.”
This phrase crops up regularly – in election manifestos, press conferences and parliamentary debates. You could almost believe it is part of the national tradition, just like the national holiday or the Schueberfouer.
The only difference is that while the funfair is actually built every year, the promised affordable housing still seems to reside somewhere between concept paper, strategy plan and presentation slide.
VEFA – Luxembourg’s most modern living concept: first the loan, then the building site
VEFA – Vente en état futur d’achèvement – sounds good, almost reassuring. What sounds so reassuring translates as: You buy an apartment that doesn’t even exist yet. The elegant solution with a lot of potential danger.
A project is presented in glossy brochures. Accompanied by high-quality visualizations, perfectly cut green spaces and spacious balconies. Buyers sign the contract, banks provide the loan – and the payment plan begins.
This payment plan is precisely regulated. At VEFA, the purchase price is paid in stages as construction progresses. Up to 20 % of the purchase price may be due at the start, followed by further installments – around 15 % for the shell, 20 % for the roof and façade – until around 95 % of the total price is paid at the end, long before the apartment is actually completed.
For buyers, this means that they are already paying for an apartment while they are often still paying rent for their current accommodation. In a market where an average 80 m² apartment now costs around €770,000 or more, these payment phases can quickly reach several hundred thousand euros.
And then begins the part of the model that is rarely mentioned in the glossy brochures: Construction delays. Rising construction costs. Financing problems. In some cases, even the insolvency of property developers, where projects suddenly come to a standstill and buyers wait years for clarity.
The result is a remarkable distribution of risk:
The result is a real estate model in which many things can be uncertain – construction time, completion, market prices. Only one thing works with impressive precision: the payment plan.
Garantie d’achèvement – When safety means time above all else
And then there’s the magic word: Garantie d’achèvement. What initially sounds reassuring to many buyers often turns out to be an elegant reassurance pill in practice. The term conveys security – in fact, it guarantees one thing above all: that the building site will be finished at some point. At some point.
When buying a VEFA apartment, a bank or insurance company steps in if the developer runs into financial difficulties. For buyers, however, this does not mean that everything goes according to plan. It simply means that their apartment should exist in the end – only when exactly remains a rather flexible concept.
The guarantee therefore provides reliable protection against a permanently half-finished concrete building, but hardly against years of delays, changing developers or a test of patience that can take significantly longer than the original construction plan.
No property? Maybe there’s still enough for a rental contract.
Rents have also seen a meteoric rise in prices.
Current offers are already around €30.5/m² in 2026.
While politicians have been loudly promising for years: “We will create affordable housing.” the market has apparently developed its own interpretation of this term: A few euros more per square meter every year.
For many families, this no longer means the question of whether they can find an apartment – but only in which neighboring country.
France, Belgium and Germany are thus becoming Luxembourg’s extended residential area, while Luxembourg itself is increasingly becoming a place where it is good to work but increasingly difficult to live.
Investors welcome, families less so
While young families are moving abroad, Luxembourg is being promoted internationally as a particularly attractive real estate market. Behind the curtains of the political stage, there are whispers that new instruments will soon be available to nudge the real estate market in the right direction. Housing bonds are intended to facilitate investment in housing construction. Officially, of course, they are also intended to promote affordable housing.
The Luxembourg real estate market is also regularly promoted on the international stage – for example in Cannes, where the global real estate industry meets once a year. Luxembourg ministers also travel there to inspire investors for the country over a good glass of champagne and a few carefully arranged canapés.
You could almost get the impression that the housing crisis could be solved particularly efficiently if only it were presented in a sufficiently sunny atmosphere.
So while families at home are desperately looking for apartments, people on the Côte d’Azur are talking about how attractive Luxembourg is for capital. After all, priorities are important.
However, critics suspect that many of these instruments promote one thing in particular: Investment.
This fits in with a real estate market that has long been shaped more by capital flows than by housing needs. In Luxembourg, apartments are no longer just places to live. Above all, they are investment products with balconies.
The solutions have long been on the table – they are just being elegantly ignored
What is really remarkable about the Luxembourg housing crisis is not its complexity. It is neither a mysterious economic phenomenon nor an unsolved scientific problem.
On the contrary. The causes have been known for years. And so have the solutions.
A more consistent approach to unused building land, significantly more public housing construction, stricter rules against real estate speculation, faster approval procedures and more intelligent urban densification could certainly relieve the market noticeably.
None of this is revolutionary or particularly exotic. Other European countries have been showing for years that such measures can work.
They would just have to be implemented.
The real question: knowing or wanting?
Luxembourg does not have a knowledge problem. Luxembourg has an implementation problem.
As long as housing is primarily seen as an investment and political reforms are only implemented cautiously, slowly and, if possible, without causing major irritation, little will change. After all, the housing crisis is not a law of nature. It is the result of political decisions and can therefore be solved politically.
The crucial question is therefore no longer what needs to be done. The question is much simpler. Whether you really want to do it.
