Luxembourg

As of October 2025, Luxembourg’s housing market is in recovery, with prices for apartments rising by around 1.8% year-on-year and rental costs continuing to be among the highest in Europe. The latest official figures show that only about 63.5% of households are home owners, with 36.5% renting—an ownership rate that has declined sharply in recent years. Median rent for apartments in Luxembourg City is about €34.49 per square meter, while average rent for a one-bedroom apartment is between €1,800 and €2,200. For buying, recent prices for existing apartments average near €10,800 per sqm nationally, with higher figures in central districts.

Publicly owned housing—including both social and affordable housing—has a small share of the market, with less than 3% of total housing stock. Public housing is often reserved for households with low incomes, single parents, or those with special needs. Social housing is a subset focused strictly on means-tested rental for the most vulnerable, whereas affordable housing may serve those who do not qualify for strict social criteria but still cannot afford market rates. Access is limited, with long waitlists and strict eligibility rules. The Luxembourg state is increasing investment in both segments, but demand vastly exceeds supply, and most residents must rely on the private market.

Luxembourg’s housing crisis continues to affect a broad spectrum of residents due to persistently high prices, limited supply, and affordability issues. As of 2025, property prices remain among the highest in Europe, with Luxembourg City apartment prices averaging €11,800 to €12,200 per square meter and national averages near €8,700. Rents are also expensive, averaging €34 to €39 per square meter for apartments in the capital and around €33 nationally. Median monthly rents for one-bedroom apartments regularly exceed €1,800, placing a significant portion of households under financial strain.

The crisis is partly driven by insufficient new construction: annual demand for new homes ranges from 5,600 to 7,500 units, yet building activity consistently falls short, worsening supply pressures. Homeownership rates have fallen rapidly, with just 63.5% of households owning their homes and the rest relying on a private rental market where costs are increasing and protections may be limited.

Low- and middle-income residents, young people, families, single parents, and newcomers are particularly affected, as they face long waiting lists and strict eligibility for scarce public or social housing. Even moderate earners increasingly struggle to access homeownership or afford market rents. The housing cost burden has risen to over 23.5% of household income, further exacerbating inequality and exposing more people to housing insecurity.

Luxembourg's national government is actively tackling affordable and sustainable housing through a combination of significant investment, regulatory reform, and targeted incentives. Recent targets include the creation of thousands of affordable units by 2027, supported by a budget of €1.45 billion and an enlarged public housing development program with an additional €480 million. Initiatives center around the Housing Pact 2.0, which drives cooperation with municipalities, mobilizes unused land, and prioritizes housing in optimal locations while ensuring quality living environments. Municipalities receive new grants of €2,500 for each affordable unit established or planned, particularly in designated priority zones.

Concrete measures include increased eligibility for housing assistance, higher income thresholds for aid, improved rent subsidies, enhanced homeownership grants (now covering up to 59% of households), and raised state loan interest subsidies. Administrative reform streamlines permitting and planning processes to speed up housing development, alongside plans for taxing unused buildable land to drive land availability. Sustainability is integrated via incentives for energy-efficient renovations, adoption of green building practices, and support for projects that meet decarbonization goals, reflecting Luxembourg’s push for both environmental and social resilience in the housing sector.

Housing cooperatives in Luxembourg constitute a very small but slowly growing segment of the national housing market. Their main purpose is to offer affordable, community-focused rental homes that are collectively owned and managed by their residents, promoting participation and social integration. The sector remains at an early stage, with only a handful of active projects—such as Adhoc and a new initiative in Belval South that marks the first allocation of public land for cooperative housing. Typically, these cooperatives serve 10 to 20 households each. Official statistics indicate that cooperative housing represents a negligible share of the country's total housing units, far below 1%. Development has been hampered by high land costs, competition from private real estate, and narrow regulatory support.

Recently, government and local authorities have taken modest steps to encourage cooperatives, including offering access to affordable land, technical advice, and administrative assistance tailored to cooperative initiatives. Policy frameworks and municipal engagement are beginning to signal greater political interest, but concrete impact is limited so far. The outlook is cautiously optimistic, provided support and public awareness continue to grow. Most housing policy measures and significant public spending remain focused on affordable and sustainable housing in general, rather than directly prioritizing the cooperative sector.