Luxembourg, one of the richest nations in the European Union, is grappling with a housing crisis that has forced some residents to “cross borders” in search of affordable rent. Despite its flourishing economy, the cost of buying or renting a home in the country has made it nearly impossible for many people to live there. This housing crisis has become the primary concern as Luxembourg heads to the polls on Sunday.
One resident, Pascale Zaourou, a teacher and mother of three, had to wait five years before finally accessing social housing. She explained that renting a two-room apartment on the private market costs at least 2,000 euros, which is challenging with only one income. “Affordable housing is scarce, especially for young people and single-parent families,” she lamented.
Antoine Paccoud, a researcher at the Housing Observatory, confirmed that more Luxembourgers are moving to neighboring countries like Germany, Belgium, or France due to lower rents and property prices. This situation is particularly striking for a country with a robust economy based on financial services.
Luxembourg residents have the highest net average earnings in the European Union, estimated at 47,000 euros per year for a single worker in 2022. However, new-build flats in the capital city sell for 13,000 euros per square meter, older flats for 10,700 euros, and the average cost of a house is 1.5 million euros.
Rents have been rising rapidly, with a 6.7 percent increase between June 2022 and June 2023, surpassing the inflation rate of 3.4 percent during the same period. Philippe Poirier, a political analyst, noted that the housing crisis has overshadowed all other issues in the upcoming legislative elections. The scarcity of housing, high costs of construction and purchase, and exorbitant rents have become key problems.
The major political parties vying for power in the next government have promised to address the housing crisis. Prime Minister Xavier Bettel’s Liberal Party plans to establish a super-ministry for housing, increase taxes on vacant properties, and invest in social housing. Socialist leader Paulette Lenert, the current health minister, advocates for significant investments in affordable housing.
However, the housing problems in Luxembourg run deep and present complex challenges. Paccoud pointed out that the lack of inheritance tax and minimal duties have encouraged landowners to retain their properties without developing them. He stated that half of the buildable land is owned by just 0.5 percent of the resident population, who hold on to it as prices increase.
Additionally, the influx of foreign workers in search of economic opportunities contributes to the scarcity and high cost of housing. Approximately half of Luxembourg’s population consists of non-citizens, leading to significant discrepancies in home ownership rates. Native Luxembourgers have an 80 percent ownership rate, while foreign residents have only 50 percent. The job market for foreigners is less stable compared to the nearly guaranteed employment in state institutions for Luxembourgers.
Despite high salaries and an official minimum wage of 2,571 euros per month, Luxembourg ranks among the top three countries in the eurozone in terms of the risk of poverty for single-parent families with one income. This highlights the challenges faced by residents, particularly foreigners, in affording suitable housing in the country.
The housing crisis in Luxembourg is a pressing issue with no easy solutions. However, the upcoming elections and promises from political parties signify a recognition of the problem and a commitment to address it.