Price per square metre in Luxembourg: why it is not enough

Price per square metre has become the most instinctive answer to any property question. It allows listings, municipalities or periods to be compared quickly. It gives an impression of precision. But applied to an individual property without scrutiny, it can produce a false value with a reassuring appearance of simplicity.

In Luxembourg this limitation matters particularly. The country is small, yet the differences between municipalities, neighbourhoods and even streets can be considerable. The number of transactions genuinely comparable to a particular house may be low. And above all, as we shall see, Luxembourg’s public statistics do not cover every category of property in the same way.

A floor area is not a neutral figure

Before discussing price per square metre at all, one must know which area is being used. Habitable area, usable area, cadastral area, saleable area and gross area do not describe the same thing.

Two houses each advertised at 250 m² may offer very different qualities. In one, the areas are largely habitable and well lit. In the other, a significant proportion consists of circulation, roof space, basement or areas of limited use.

The valuer must not adopt an area simply because it appears in a listing or an old document. They must check its source, its definition and its plausibility. Where a full measured survey does not form part of the instruction, that limitation must be stated explicitly. Comparison then requires the adjustments needed to reflect, among other things, the date, location, condition, floor areas, site, legal interests and letting position of each reference.

What Luxembourg’s public statistics cover, and what they do not

This is the most widely misunderstood point in the Luxembourg market, and it deserves to be stated plainly.

The Observatoire de l’Habitat, a service of the Ministry of Housing established in 2003 and working in collaboration with LISER, publishes price statistics built from notarial deeds. These data come from the Publicité Foncière, an extract of which is transmitted monthly by the Administration de l’Enregistrement et des Domaines. STATEC additionally publishes a hedonic price index. These sources are valuable for understanding how the residential market is moving and how it differs across the country.

But these detailed statistics relate to flats.

For single-family houses, coverage is structurally different. These properties do not give rise to a vertical cadastre prepared by the Administration du Cadastre et de la Topographie. It is therefore not possible to supplement notarial deeds with information such as the floor area of the property sold. The only data available in the Publicité Foncière are the total transaction price and the site area.

The Observatoire de l’Habitat draws the consequence itself: this information is insufficient to provide reliable information on house sale prices. It therefore publishes no detailed statistics for this segment, and its price simulator covers flats only.

The conclusion is direct. If you are looking for the value of a house in Luxembourg, no public tool will give it to you. The price per square metre you find online derives either from statistics relating to flats, or from listings, or from private aggregations whose methodology is not always disclosed.

What price per square metre does not show

The value of a house depends, among other things, on:

• micro-location and nuisances;
• the size, shape and orientation of the site;
• development rights and easements;
• the condition of the structure, envelope and building services;
• energy performance and necessary works;
• internal layout and the quality of the accommodation;
• light, views, privacy and acoustics;
• accessibility and adaptability;
• the rarity of the property and the likely number of buyers;
• liquidity in the market conditions observed.

These factors should not be reduced to a mechanical list of percentages. Their influence depends on the property and the market to which it belongs.

Comparing, but comparing with discipline

The market approach remains fundamental where relevant data are available. It consists of examining identical or similar assets for which price information exists, then adjusting for differences.

The quality of a comparable does not depend on geographical proximity alone. A more distant sale that is similar in type, date, site and condition may be more useful than a radically different house next door.

In Luxembourg, listings often form the visible part of the search. They should be analysed as competing supply, with the necessary caution: an asking price expresses an intention, not evidence of an agreement between a seller and a buyer.

Market value and the approaches recognised by IVS

In a sale, a division or a transfer, the basis sought is usually market value within the meaning of the International Valuation Standards (IVS). It is an opinion of value at a given date, established on the assumption of a market transaction between parties who are independent, informed, prudent and acting without compulsion. IVS then distinguish three broad approaches. They are not competing by nature: each answers a different logic and may serve as the primary approach or as a cross-check depending on the property, the instruction and the quality of the data.

The market approach. This compares the property with transactions or other price evidence relating to identical or similar assets. In Luxembourg residential work it is often the clearest starting point. Its reliability nonetheless depends on the quality of the comparables and the relevance of the adjustments.

The income approach. This converts into value the sustainable net income the property can generate. It examines market rent, vacancy, irrecoverable outgoings, future works, letting risk and the return required by the market. It is particularly relevant for tenanted buildings, commercial units and income-producing portfolios. This subject is developed in our article on rental yield.

The cost approach. This distinguishes the value of the land from the contribution of the building, starting from a current replacement or reconstruction cost adjusted for physical deterioration, functional obsolescence and, where relevant, economic obsolescence. In Luxembourg residential practice this approach can become structural, or even primary, where sufficiently documented comparable transactions are lacking.

The choice of method must never be automatic. An occupied family house, an investment property and an unconventional architect-designed villa are not read with the same hierarchy of approaches. Where a second approach is sufficiently relevant and documented, it can test the coherence of the first. The valuer must then explain the weight given to each result, rather than calculate an unexplained average.

The particular role of the cost approach in Luxembourg

For a distinctive villa, an unconventional building or a market thin in comparable transactions, the cost approach may structure the analysis. This situation arises frequently in Luxembourg, precisely because house sales are not the subject of detailed public statistics.

The method generally distinguishes the land value from the contribution of the building, taking account of replacement or reconstruction cost, then of depreciation and the various forms of obsolescence.

The method does not consist of adding up historic invoices. Cost incurred is not necessarily value created. A very expensive installation may be over-specified or attract only limited demand. Conversely, a restrained and thoroughly coherent piece of architecture can generate strong desirability without relying on ostentatious materials.

The distinction between cost incurred and value recognised is explored further in our article on the value of a family home.

Expert judgement, not a secret formula

The valuer’s role is not to replace missing data with an arbitrary opinion. It is to cross-reference information, assess its reliability and select the most appropriate approach.

The essential point: a trend is not a value

Price per square metre describes a market trend. It does not describe a property.

In Luxembourg this distinction is reinforced by a structural reality: detailed public data exist for flats, not for houses. For an individual property, and particularly for a house, only a documented analysis can produce a defensible value.

Frequently asked questions

Is there a public register of house sale prices in Luxembourg?

No. The Observatoire de l’Habitat publishes detailed statistics for flats, but not for single-family houses. As these properties are not subject to a vertical cadastre, the Publicité Foncière data are limited to the total price and the site area, which is considered insufficient for reliable statistics.

Can the public price simulator estimate my house?

No. The Observatoire de l’Habitat simulator covers flats only, for the same reason. There is no equivalent for houses.

Can asking prices in listings be relied upon?

They indicate competing supply and sellers’ intentions. They are not evidence of a price actually agreed and must be treated with caution.

Having a property valued in Luxembourg

An architect and sworn property expert before the Superior Court of Justice of Luxembourg, David Michels prepares valuations based on an individual analysis of the property, not on a municipal average.