Luxembourg residential real estate market 2025: trends and outlook

In brief

• Luxembourg’s real estate sector is rebounding, with transaction volumes increasing after a period of slowdown. 
• Existing home prices have softened, while new-build apartments maintain price stability. 
• Construction activity has fallen sharply since 2021, signaling potential future supply constraints. 
• Strong population growth continues to underpin housing demand, with projections nearing one million residents by 2050. 
• Expanding tram networks and urban development are reshaping the residential fabric of Luxembourg City. 

The Luxembourg residential real estate market is entering a new phase in 2025, marked by cautious optimism and significant transformation. After a period of slowed activity driven by rising interest rates, inflation, and geopolitical uncertainty, the market is showing signs of recovery. Transaction volumes surged by 49% in 2024, indicating renewed confidence among buyers and investors. However, construction activity has declined sharply, with output nearly halved since 2021, raising concerns about future housing supply and affordability.

Population growth remains a key driver, with Luxembourg’s population increasing by 1.5% in 2025 and projections suggesting it could reach one million by 2050. This demographic momentum is driving demand for both new and existing dwellings, while urban development initiatives such as the expansion of the tram network and strategic zoning are transforming Luxembourg City’s residential landscape. The report reviews macroeconomic trends, regulatory shifts, and buyer preferences to outline upcoming opportunities and challenges. With data-driven analysis and expert insights, this research equips stakeholders to navigate the complexities of Luxembourg’s housing sector and capitalize on emerging trends in 2025 and beyond.

The report explores the critical factors shaping Luxembourg’s residential real estate market in 2025 across the following topics:

Market trends and recovery - Luxembourg’s real estate market rebounds in 2024, with rising transactions and shifting buyer sentiment.

Population growth and housing demand - Steady population increases, and skilled immigration sustain long-term demand for residential properties.

Construction costs and supply challenges - High construction costs and reduced output may lead to future housing shortages and upward pressure on prices.

Urban development and transport innovation - Luxembourg City’s ambitious tram network expansion and zoning reforms are transforming residential opportunities.

ESG and energy efficiency - New developments emphasize sustainability, with 65% of listings rated Class A for energy efficiency.