House prices in Luxembourg fell in the third quarter of this year amid a slowdown in activity following the expiration of tax benefits at the end of June, the country’s Housing Observatory said Thursday.
Prices dropped by 3.1% compared to the second quarter of 2025, but remained 1.2% above the same period in 2024, the Observatory found.
“Activity in the real estate and land markets increased very strongly in the second quarter of 2025, driven in particular by buyers seeking to take advantage of tax benefits before their final expiration on 30 June 2025. Consequently, activity slowed in the third quarter of 2025,” the report noted.
A series of incentives aimed at boosting activity in the housing market expired on the last day of June this year, including an accelerated 6% depreciation for off-plan sales and the taxation of capital gains at one-quarter of the overall rate.
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The drop in prices came after a 4.5% price rise between the first and second quarters of the year, a fluctuation which the report also attributed to the tax measures.
“Our hypothesis was that the renewed activity, largely linked to the expiration of tax measures, may have had a mechanical effect on sales prices: some buyers wishing to take advantage of these temporary measures may have accepted higher price levels than they would have in the absence of a deadline on the transaction date,” the report said.
However, some transactions registered in the third quarter “corresponded to purchases made to benefit from temporary tax measures”, the Observatory said, due to the government extending the deadline for signing the notarial deed to finalise the transaction until 30 September.
“Nevertheless, the significant level of activity observed in the third quarter of 2025 is not solely attributable to the tax measures; it also reflects a market recovery,” the report said.
The number of transactions for existing properties had returned close to levels seen before the slump of recent years, the Observatory said, with 1,052 sales of existing apartments in the third quarter of 2025, compared to an average of 1,081 transactions in the third quarter from 2017 to 2021.
However, despite strong growth for the purchase of new-build apartments – up 125% compared to the third quarter of last year – activity remains well below levels of previous year.
“The number of transactions represents only half the pre-crisis average, with 324 transactions in the third quarter of 2025, compared to an average of 625 sales of apartments under construction in the third quarter from 2017 to 2021,” the report said.
Rents increased “significantly” in the third quarter, the Observatory found, up by 1.9% compared to the second quarter, and a rise of 1.2% on the same period a year earlier.