House prices overvalued, growth may slow, stats bureau says
Housing prices were marked by "considerable and significant over-valuations" last year, Luxembourg's statistics bureau Statec said on Tuesday, and values could rise at a slower rate over the next two years.
Most of the dramatic price in house prices in the country could be explained by fundamental factors, the agency said. However, "2019 and especially 2020 were exceptions in this report" the agency said in a note.
Last year showed a peak rise in house prices by 14.5%, Statec said, estimating that house prices were overvalued by 5% in that year. The agency forecast real estate prices to rise by 9% this year and by 5% the next.
Luxembourg has one of the priciest housing markets in Europe, and around 70,000 citizens have opted for cheaper housing in neighbouring Germany, France or Belgium, pushing prices up there as well.
One of the reasons for higher prices in Luxembourg can be explained by thousands of vacant dwellings in the country, a sign that real estate speculation is aggravating one of Europe's worst housing squeezes.
Luxembourg - unlike for instance Ireland - does not have a law in place that obliges the national government and local authorities to register vacant housing units. Some 6% of all housing units in the country were currently vacant, the government estimated in March of this year.