Waiting for prices to drop? The data says don't.
The EU’s 2026 Country Report for Luxembourg puts hard numbers on something the market has been signalling for a while: we are not building nearly enough, and the gap is growing.
Luxembourg needs 133,360 new dwellings by 2035. Currently planned and in the pipeline: 29,432. That leaves a gap of just under 104,000 units - more than three times what is actually being built.
Dwellings needed by 2035
133,360
Projected demand
Currently planned
29,432
In pipeline to 2035
Construction gap
103,928
Units with no plan
Why so little is being built
Building permits have been falling since 2019. Construction costs have nearly doubled since 2015. Investment in housing has been flat or declining since 2020. The issue is not lack of demand - it is that delivering new homes in Luxembourg right now is expensive, slow, and uncertain. The Commission identifies around 2,400 hectares of land that could accommodate 125,000 units - if it can be mobilised. The bottleneck is everything between owning land and handing over keys.
The property tax reform that would push landowners to actually release that land for development has an implementation date of 2028 - and the Commission already flags delays as likely. Meanwhile, fiscal incentives that stimulate demand, including the Bëllegen Akt tax credit and expanded mortgage deductibility, were made permanent in 2024. More demand, no new supply. The direction of travel is clear.
The Commission’s conclusion: the housing shortage is not expected to be addressed in the short term.
What this means right now
Most buyers I speak to are focused on the correction of the past two to three years - not where prices were a decade ago. That correction is real, and it matters. But a further, supply-driven decline would require homes to actually arrive in volume. They are not going to.
The current moment - prices below the 2022 peak, mortgage rates broadly stabilised, borrowing capacity improving thanks to wage indexation - is more interesting than it looks. For sellers, conditions are more stable than they have been in two years. For buyers waiting on the sidelines, the question worth asking is not will prices fall furtherbut what is actually available now, and what will it be worth in five years.
If you want to talk through what this means for a specific property or search, get in touch.
Source: European Commission, Staff Working Document 2026 Country Report - Luxembourg (SWD(2026) 216 final), June 2026. Data from Eurostat, Graph A16.3.
