Study: Luxembourg has enough land for housing, but it is owned by a select few

The study is part of the Grand Duchy’s push to create a robust affordable housing strategy and calm a volatile market

On Monday, Henri Kox, Luxembourg’s Minister of Housing presented three studies on how much available land the Grand Duchy has for the construction of housing. The studies found that Luxembourg has 3,750 hectares of available land, which can host around 142,000 housing units or the equivalent of 300,000 inhabitants.

For comparison, the country has a population of around 632,000 people and according to the Minister of Housing, this means there is more than enough land. However, 0.5% of the population owns half of the land.

Kox explained that land mobilisation or the construction of new housing is a priority of Luxembourg now and the government needs to develop a robust housing strategy. The studies provide an excellent scientific aid to do that because they identify the land, its location by municipality, its status and what's more, they also provide policy suggestions.

Land of the few

According to the study, half of all land available for residential construction (around 1,800 hectares) in Luxembourg is owned by around 3,400 individuals. Furthermore, the analysis found a strong link between the prices of land and the rising prices of housing.

Between 2010 and 2017, residential land prices grew by an average of 7.9% annually. From 2018 prices started climbing, reaching an annual increase of 16.9% in 2019 and 2020. These fluctuations largely follow the prices of housing, however, when it comes to land, increases tend to be stronger. This suggests that they are the cause for the inflation in housing.

While, to an outsider, this year’s amazing 17% housing price rise in the Grand Duchy may seem extreme, the concentration of so much land in the hands of so few people really tells a story. Furthermore, according to Minister Kox, this could be a good thing if the landowners could persuaded to build affordable housing.

Luxembourg urgently needs affordable housing

Henri Kox is clear, Luxembourg needs affordable housing and it needs it as soon as possible. In fact, he explained that a lot of the country’s current housing crisis could be largely solved if construction could start in the next four years.

To incentivise said construction, the government is developing a new strategy to mobilise vacant land plots, as well as municipal lands, currently accounting for 13,5% of the total available. The main instrument authorities plan to use is a land mobilisation tax, to disincentives stockpiling of land that can be used for development.

Henri Kox was quoted in a press release saying: "Private property must not fuel the soaring prices of housing to the detriment of access to affordable housing for a large part of the population. This is why high investments in the massive creation of affordable public housing are a priority, and for that the mobilisation of building land is essential!"

Another point of the strategy is to prioritise net-zero soil sealing. Despite Luxembourg’s dire need for housing, new developments should account for the country’s sustainable goals.

The Minister for Energy and Spatial Planning, Claude Trumes, for his part, put it quite succinctly: “The soil is our common good, our national heritage and our heritage for generations to come.”