On 4th October, our partners ING Luxembourg published the results of a study on property undertaken by ING International Survey. In the Grand Duchy, 500 people were surveyed. We summarise the results here.

Contented residents?

People with housing in Luxembourg are more satisfied with their accommodation than the European average. The study shows that 78% of residents are happy with their housing situation, compared to 68% across Europe as a whole.

However, a difference may be observed according to the status of residents as house owners or tenants. 85% of owners are satisfied with their housing, compared to 64% of tenants.

The reality of the Luxembourg property market

The Grand Duchy of Luxembourg is well known for property prices far higher than those of its neighbours. These affect not only house sales but also rentals. 89% of respondents in the ING study considered the prices to be very high, compared to 60% across Europe as a whole. Unsurprisingly, this confirms the general sentiment regarding property prices in Luxembourg. The situation is not likely to change anytime soon, with 78% of respondents believing that prices will continue to rise.

As a result, purchasing or renting in Luxembourg is becoming increasingly difficult. Who hasn’t heard a friend or colleague complain of the difficulty of settling in Luxembourg because of high property prices? Those who decide to make the leap must develop new habits. ING International Survey asked owners about these new habits: 70% of those surveyed had had to modify their expenditure to be able to afford housing. Thus, 45% of these people had put money aside to maximise their contribution (compared to a European average of 33%), 27% had considerably reduced their expenditure (compared to a European average of 41%) and 20% had simply opted not to go on holiday (compared to a European average of 21%). Nevertheless, 30% had made no changes (compared to a European average of 18%). It seems, therefore, that compared to the European average, Luxembourgish residents are not too badly off as they are able to save more and reduce their spending by less. However, each country is a specific context, and the level of salaries in Luxembourg plays a significant role.

The advantage of interest rates

While property prices rise slightly each year, in 2016 property lending rates have never been so low. However, behaviour in relation to bank loans has not (yet) changed in comparison with 2013. The ING study demonstrates that 35% of respondents prefer fixed rate mortgages in 2016, whereas in 2013 this figure stood at 38%. It also emerged that almost one third of respondents do not know which lending arrangement to choose, and that 50% of respondents think that rates will rise in the next 3 years.

Therefore, on the one hand, we have fixed rate mortgages which are currently more advantageous than variable rate mortgages, and on the other hand, the feeling that these rates will not remain as low in the coming years. It is therefore quite difficult for potential owners to choose between different lending arrangements for a mortgage lasting 20, 25 or even 30 years. To receive assistance regarding finance for your property, contact our partners ING.


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