2024-04-11 17:42:55
Property prices continued to fall in the last quarter of 2023, with a drop of 18.8% for houses and 14.5% for existing apartments. Like these, prices for new construction also fell in the fourth quarter: 7.6% in annual terms, as shown in the “Logement en chiffres” report from March 2024.
But this decline did not translate into an increase in transactions. In the final months of last year, there were 106 transactions for existing properties, a decrease of 72.8% compared to the fourth quarter of 2022. And the number of new construction transactions in 2023 was down 68% compared to 2022.
Drop of more than 75% in sales
Public real estate developers are also having difficulty selling their properties. In 2023, the National Society of Cheap Housing (SNHBM) sold 38 new constructions, including 16 apartments and 22 townhouses. In 2022, 187 units were sold, including 98 apartments and 89 houses. This is a drop of more than 75%.
The numbers show that public real estate developers are unable to contain the housing crisis. It would be expected that the situation in the private real estate market would have led buyers to look for public developers. But that didn’t happen.
SNHBM apartments are cheaper than those on the private market because they are sold without land, but not even this factor contributed to an increase in sales. It is not clear to what extent SNHBM will – or can – adjust its prices without incurring losses.
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Elmen: 5,400 to 5,900 euros per square meter
In Elmen, a subsidized apartment, i.e. sold as affordable housing (affordable housing), continues to cost between 5,400 and 5,900 euros per square meter, after deducting state aid. Questioned by “Wort” last January, director Guy Entringer, director of SNHBM, justified the value with the rise in interest rates on loans, the increase in construction costs, but also the demands imposed by various authorities (archaeological excavations, for example).
A subsidized SNHBM apartment for sale in Esch/Alzette (Nonnewisen project) costs on average around 5 thousand euros per square meter, according to a recent response from Housing Minister Claude Meisch (DP) to Marc Goergen (Pirate Party). The price does not include the land, kitchen or painting.
The response also reveals that SNHBM sells its apartments at a price 6% higher than the construction cost. This margin is a guarantee for the financial risk resulting from the estimation of construction prices and a possible increase in material prices during the course of the project, Claude Meisch informed the Pirate Party deputy.
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Repurchase of SNHBM apartments
SNHBM sells some of the apartments it owned in the past several times. Between 2018 and 2022, the organization bought back and resold 44 apartments that it had sold to be rented, using its priority right. This fact was revealed in December 2022 in a parliamentary response from the then Minister of Housing Henri Kox (Déi Gréng). It is important to note that, unlike other private real estate companies, SNHBM – a public limited company – does not pay any registration fees (registration) or taxes on your profits.
But under what conditions did the real estate developer buy and resell these properties? The law of August 7, 2023 defines the buyback conditions. The evolution of the construction index is taken into account, which has registered a strong increase in recent years.
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With regard to the resale price, the Government’s First Advisor at the Ministry of Housing, Mike Mathias, stated in an interview with “Wort”, in May 2022, that the public prosecutor must take the repurchase price into account. However, he also considered that the property developer may adjust the price upwards as a result of additional investments (renovation costs, for example).
Goergen wanted to know more about the difference between the purchase price and the sales price, but didn’t get the answer he wanted. SNHBM does not have statistics on this matter, said the minister. But the agency strives to treat its customers fairly and bases its prices on those of comparable apartments.
This article was originally published on Luxembourg word and adapted for Contacto by Ana Tomás.
2024-04-11 17:42:55