Property prices still rising despite interest rate hike
Flats and houses in Luxembourg were more expensive at the start of October compared to a year ago despite the property market being under increased strain with rising interest rates pushing up mortgage costs, a real estate website said on Thursday.
Property prices rose by 2.4% on average at the start of the month compared to the last three months of 2021, agency atHome said, with the cost of existing properties outpacing new ones. Existing flats and houses combined were 7% more expensive on average while the price of new builds was "stabilising", according to atHome.
"Even though the rise of interest rates puts the real estate market under pressure, it resists," atHome said. It was the first analysis the agency published since the European Central Bank started hiking interest rates to slow down inflation.
The rise in property prices comes as Luxembourg's central bank said the amount in mortgage loans that banks handed out in August dropped compared with the previous month. While the number of transactions in the housing market has decreased, prices have not.
The price evolution of new builds varied significantly, atHome noted, as those in the country's north and east jumped by 15.8% and 4.4% respectively while those in Luxembourg's south dropped by 2.7%.
Last week, the government put forward a draft law to levy new taxes on unoccupied properties and vacant land in an attempt to ease the pressure in the country's overheated housing market. The plans are not intended to lower property prices, Housing Minister Henri Kox has said, adding that the country cannot afford a recession.