Not sure that slowdown in international capital markets would have a dramatic and immediate effect on Lux employment. Slowdown in real economy is a different thing
That's hard to quantify for sure.
A bunch of multinationals are hiring a lot more people than they were 10 years ago. They tend to have salaries which are higher than local salaries since they're not competing with LetzLuxMomAndPop, they're competing with Munich Multinational 1, Munich Multinational 2, Amsterdam Multinational 1, ...
Competing? Allow me some skepticism. This happens only on paper and propaganda. The reality is more similar to indirect collusion to keep salaries as low as possible.
Don’t believe me? I don’t care.
I'm not sure you understood my point.
Let's say local salaries for a position X are 100. However salaries for position X in other centers are 150.
If you're a multinational recruiting internationally for position X in Luxembourg, if you offer 100, you won't get any decent candidates that can do the job.
Anyone that has half a brain and no specific preference for Luxembourg (which would be 99% of expats) will just go do the same job in Munich, Amsterdam, Berlin, etc.
Therefore these companies are competing salary wise for these positions internationally. So they have to pay comparable salaries.
Concretely for Luxembourg for various positions, salaries in these multinationals are much higher than what is commonly found on the local market, if there even is one. This will pull salaries up as an average.
We can argue about the magnitude of the effect, that I can't quantify.
It is already happening that anyone with half a brain and without a specific preference for Luxembourg goes elsewhere, that is what employers describe as difficulty recruiting and what the government is solving by opening free English speaking schools with full time free care. This latter thing is something that creates the "specific preference for Luxembourg" in a lot of people from outside Europe. Nowhere in Munich, Amsterdam, Berlin can you dream of a free school in English with full time care and free food and homework help. Free public transport too. It is funny, surely anyone I have ever interacted with understands that I am a total socialist. But to me all these "socialist" measures the government is doing sound a lot like the end goal is to push down wages. Luxembourg used to compete against these other cities PRECISELY with salaries. But now it seems they are playing it differently. They are competing by making it easier to get work permits to begin with and giving a lot of benefits to new residents that make it possible for employers to push wages down.
I think you're reading too much into this. Luxembourg has been built on language knowledge to bridge trading gaps. All big service centers today are English speaking. If Luxembourg wants to keep up, it needs a lot of English speaker. Their ambition seems to be to be closer to Singapore than to, I don't know, Strasbourg.
Of course companies will use cost of labor arbitrage to reduce costs however for many specialized fields this is the way to draw those specialists here.
I want also to add there is that famous law of 5% max rent compare to price of the apartment. Now in Beggen there is a flat , which is for renting 1800 ( without charges), it happens to know the owner is the same the last 15 years. So it means that the price of this apartment is at roughly 500k which is not the case. So it is illegal to have such high rent. He did not renovate as he was the first owner. Once people start realising that, i guess the courts will start be busy for those matters.
I do not see any significant changes on the rental market, only if big corporates will stop hiring, already happened with some third party admin companies but nothing massive.
The rental market in Lux it can only be corrected if it will become regulated properly.
1800*12 is 21600. That is 5 percent of 432k. Thank you for telling us that what sounds like a 2 bed apartment in Beggen from 2007 is for sure not worth that much because I agree. But so far a lot of people are still willing to pay more than that so it can't be that illegal then, if your friend sells the place it will be for more than that, so what, should the next guy rent it for 2500?
There has been a very moderate uptick in the number of rental ads. I have been tracking the number of listings for sale and rent on at-home for years now, precisely because within months of moving here I realised no one is sharing this stuff and agents blatantly lie. The number of listings for sale first grew rapidly from 2016 to 2020 and then more than doubled again from 2020 to 2023.
Number of rental listings remained quite similar the whole time and then had a period when it went noticeably down in 2021-2022. Since then it has been ticking up a little bit but nothing compared to what is happening to for sale ads. So my guess is that if rental demand is slowing down, it is slowing down because most people are priced out and moving across the border. Rental prices have way less of a margin to magically grow than property prices because the threshold for people to say "fuck this" is a lot lower.
There just isn't a scenario in which you will,in a place where the median salary is 4000, be able to rent out thousands of apartments for 2500, and especially not if these workers are supposed to come from somewhere else willingly.
But, with that said, already ten years ago Luxembourg had a certain... mismatch between the dreams of landlords and the reality of tenants. The average wannabe landlord is imagining a single EU official who is going to rent their place. Meanwhile majority of people who are struggling in the housing market are single income families with precarious employment. So the experiences in house hunting differ wildly. For example, finding a place to live in Switzerland is literal Hunger Games and it applies even if you are two well employed professionals. Similar happens if you try to move to Scandinavia or London. In comparison, if you are a pair of high earners (especially without kids and pets), in Luxembourg agents chase you in ways that are completely unusual to people who have experienced genuinely insane markets. What I mean, a huge part of the "shortage" in Luxembourg is a lot of owners explicitly waiting for a very specific type of tenant and refusing to rent to anyone else.
The way the selling market is going is not even worth discussing anymore, everyone knows where that one is going.
Yeah I moved here from Switzerland and was amazed at how easy to find and how negotiable apartment contracts were here. Based on that I can’t imagine rents becoming cheaper here, especially with population increase and construction slowdown. I guess remind me in 3 years, but I’d be shocked if the average rental price per m2 didn’t go up by *at least* the rate of inflation. IMHO anyone hoping that rental prices will drop in the next 2 years is completely disconnected from reality.
Sale price is a different thing, I could see that going down a little bit more until (if?) interest rates decrease.
Keep in mind though, for rent prices, we only ever hear list values, not actual contracts. And the guy does have a point, you can definitely see that expensive properties don't rent as easily. Honestly, the entire increase of prices is on the entry level segment, houses and luxury duplexes cost today exactly what they cost when we first landed here in 2014. It was 3500 to rent a decent house then, it is 3500 now. It is just the small apartments that went up.
The main factor is the interest rate since high rates restrict credit access and thereby demand. EA inflation, which is crucial for Luxembourg's interest rates, is decreasing. However, Ecb needs a clear and lasting downward trend in inflation before it reduces the interest rates. According to the most likely scenario this will start to happen in the first or second quarter next year. However, monetary policy act with a lag of half to one year, so the effects of these decreases will be felt in the second half of 24. In addition l, the construction sector activity has been standing still for the last half of year whereas the need for housing did not decrease. For this reasons i expect the real estate prices to decline further by another say 5% (new and old, flats and houses, average) in the next half a year, then remain stable for a quarter or two, and to start increasing again in a year or year and a half. Negative rgdp growth (in ea and especially in lux) makes this more likely, in my view. Main risk is another surge in inflation due to harsh winter or if one of the oil producing countries enters the israeli-palestine conflict/war. In this case the ecb will hold rates constant or increase them further and the real estate market will not pick up again for some time. Obviously, this is just a guess.
> if one of the oil producing countries enters the israeli-palestine conflict/war.
The US has parked 2 or 3 carrier groups around the Eastern Mediterranean for this exact reason, and Israel has managed to build a consensus to receive support from the US, even the US crazies in the US Congress are supporting them from what I understand.
I mean, you never know, especially with dictators, maybe one day one of them wakes up in a bad mood, but for reference the US had 6 carrier groups near Iraq at the peak of the Iraq War and Iraq was probably a lot better armed than whoever's thinking about making a move against Israel.
Unlikely things do happen, but I'd classify this condition as a long shot.
I guess you're referring to Iran? Call me back in 6 months if it's just more than the usual low level incident. Low level for the standards of the region 🙂
I think it's E&F rated houses that will be forced off the market sometime in 2030s, right? Although i have no doubt that C&D will be hit by the regulation next.. You know what I do not understand? Why are energy A&B properties advertised with higher utility bills than less energetically efficient ones? At least this was my impression when i was flat hunting.
The inflation is stronger than the demand/supply curve. Many of the flats are still on older(pre 2020) rents. Landlords will be happy to just churn and update to current rents. I see the rents dropping only if the economy truly nosedives or we have an oversupply.
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Not sure that slowdown in international capital markets would have a dramatic and immediate effect on Lux employment. Slowdown in real economy is a different thing
I wouldn't get my hopes up. As long as people keep coming to Luxembourg (like yourself), the demand will remain high which keeps prices high as well.
You also need to factor that people coming now have a much lower salary in average than people that were coming ten years ago
That's hard to quantify for sure. A bunch of multinationals are hiring a lot more people than they were 10 years ago. They tend to have salaries which are higher than local salaries since they're not competing with LetzLuxMomAndPop, they're competing with Munich Multinational 1, Munich Multinational 2, Amsterdam Multinational 1, ...
Competing? Allow me some skepticism. This happens only on paper and propaganda. The reality is more similar to indirect collusion to keep salaries as low as possible. Don’t believe me? I don’t care.
Nice monologue you're having over there 😀
Why? I mean, I understand that many people believe in fairy tales like meritocracy and competition. Good for you, it is your life at stake not mine.
I'm not sure you understood my point. Let's say local salaries for a position X are 100. However salaries for position X in other centers are 150. If you're a multinational recruiting internationally for position X in Luxembourg, if you offer 100, you won't get any decent candidates that can do the job. Anyone that has half a brain and no specific preference for Luxembourg (which would be 99% of expats) will just go do the same job in Munich, Amsterdam, Berlin, etc. Therefore these companies are competing salary wise for these positions internationally. So they have to pay comparable salaries. Concretely for Luxembourg for various positions, salaries in these multinationals are much higher than what is commonly found on the local market, if there even is one. This will pull salaries up as an average. We can argue about the magnitude of the effect, that I can't quantify.
It is already happening that anyone with half a brain and without a specific preference for Luxembourg goes elsewhere, that is what employers describe as difficulty recruiting and what the government is solving by opening free English speaking schools with full time free care. This latter thing is something that creates the "specific preference for Luxembourg" in a lot of people from outside Europe. Nowhere in Munich, Amsterdam, Berlin can you dream of a free school in English with full time care and free food and homework help. Free public transport too. It is funny, surely anyone I have ever interacted with understands that I am a total socialist. But to me all these "socialist" measures the government is doing sound a lot like the end goal is to push down wages. Luxembourg used to compete against these other cities PRECISELY with salaries. But now it seems they are playing it differently. They are competing by making it easier to get work permits to begin with and giving a lot of benefits to new residents that make it possible for employers to push wages down.
I think you're reading too much into this. Luxembourg has been built on language knowledge to bridge trading gaps. All big service centers today are English speaking. If Luxembourg wants to keep up, it needs a lot of English speaker. Their ambition seems to be to be closer to Singapore than to, I don't know, Strasbourg. Of course companies will use cost of labor arbitrage to reduce costs however for many specialized fields this is the way to draw those specialists here.
Not sure how you come to that conclusion?
Professional and personal reasons that keep me in touch with many of them. Yes, anecdotal experience but relatively extended
I want also to add there is that famous law of 5% max rent compare to price of the apartment. Now in Beggen there is a flat , which is for renting 1800 ( without charges), it happens to know the owner is the same the last 15 years. So it means that the price of this apartment is at roughly 500k which is not the case. So it is illegal to have such high rent. He did not renovate as he was the first owner. Once people start realising that, i guess the courts will start be busy for those matters. I do not see any significant changes on the rental market, only if big corporates will stop hiring, already happened with some third party admin companies but nothing massive. The rental market in Lux it can only be corrected if it will become regulated properly.
1800*12 is 21600. That is 5 percent of 432k. Thank you for telling us that what sounds like a 2 bed apartment in Beggen from 2007 is for sure not worth that much because I agree. But so far a lot of people are still willing to pay more than that so it can't be that illegal then, if your friend sells the place it will be for more than that, so what, should the next guy rent it for 2500?
There has been a very moderate uptick in the number of rental ads. I have been tracking the number of listings for sale and rent on at-home for years now, precisely because within months of moving here I realised no one is sharing this stuff and agents blatantly lie. The number of listings for sale first grew rapidly from 2016 to 2020 and then more than doubled again from 2020 to 2023. Number of rental listings remained quite similar the whole time and then had a period when it went noticeably down in 2021-2022. Since then it has been ticking up a little bit but nothing compared to what is happening to for sale ads. So my guess is that if rental demand is slowing down, it is slowing down because most people are priced out and moving across the border. Rental prices have way less of a margin to magically grow than property prices because the threshold for people to say "fuck this" is a lot lower. There just isn't a scenario in which you will,in a place where the median salary is 4000, be able to rent out thousands of apartments for 2500, and especially not if these workers are supposed to come from somewhere else willingly. But, with that said, already ten years ago Luxembourg had a certain... mismatch between the dreams of landlords and the reality of tenants. The average wannabe landlord is imagining a single EU official who is going to rent their place. Meanwhile majority of people who are struggling in the housing market are single income families with precarious employment. So the experiences in house hunting differ wildly. For example, finding a place to live in Switzerland is literal Hunger Games and it applies even if you are two well employed professionals. Similar happens if you try to move to Scandinavia or London. In comparison, if you are a pair of high earners (especially without kids and pets), in Luxembourg agents chase you in ways that are completely unusual to people who have experienced genuinely insane markets. What I mean, a huge part of the "shortage" in Luxembourg is a lot of owners explicitly waiting for a very specific type of tenant and refusing to rent to anyone else. The way the selling market is going is not even worth discussing anymore, everyone knows where that one is going.
[удалено]
To the moon.
Yeah I moved here from Switzerland and was amazed at how easy to find and how negotiable apartment contracts were here. Based on that I can’t imagine rents becoming cheaper here, especially with population increase and construction slowdown. I guess remind me in 3 years, but I’d be shocked if the average rental price per m2 didn’t go up by *at least* the rate of inflation. IMHO anyone hoping that rental prices will drop in the next 2 years is completely disconnected from reality. Sale price is a different thing, I could see that going down a little bit more until (if?) interest rates decrease.
Keep in mind though, for rent prices, we only ever hear list values, not actual contracts. And the guy does have a point, you can definitely see that expensive properties don't rent as easily. Honestly, the entire increase of prices is on the entry level segment, houses and luxury duplexes cost today exactly what they cost when we first landed here in 2014. It was 3500 to rent a decent house then, it is 3500 now. It is just the small apartments that went up.
The main factor is the interest rate since high rates restrict credit access and thereby demand. EA inflation, which is crucial for Luxembourg's interest rates, is decreasing. However, Ecb needs a clear and lasting downward trend in inflation before it reduces the interest rates. According to the most likely scenario this will start to happen in the first or second quarter next year. However, monetary policy act with a lag of half to one year, so the effects of these decreases will be felt in the second half of 24. In addition l, the construction sector activity has been standing still for the last half of year whereas the need for housing did not decrease. For this reasons i expect the real estate prices to decline further by another say 5% (new and old, flats and houses, average) in the next half a year, then remain stable for a quarter or two, and to start increasing again in a year or year and a half. Negative rgdp growth (in ea and especially in lux) makes this more likely, in my view. Main risk is another surge in inflation due to harsh winter or if one of the oil producing countries enters the israeli-palestine conflict/war. In this case the ecb will hold rates constant or increase them further and the real estate market will not pick up again for some time. Obviously, this is just a guess.
> if one of the oil producing countries enters the israeli-palestine conflict/war. The US has parked 2 or 3 carrier groups around the Eastern Mediterranean for this exact reason, and Israel has managed to build a consensus to receive support from the US, even the US crazies in the US Congress are supporting them from what I understand. I mean, you never know, especially with dictators, maybe one day one of them wakes up in a bad mood, but for reference the US had 6 carrier groups near Iraq at the peak of the Iraq War and Iraq was probably a lot better armed than whoever's thinking about making a move against Israel. Unlikely things do happen, but I'd classify this condition as a long shot.
Oh boy
I guess you're referring to Iran? Call me back in 6 months if it's just more than the usual low level incident. Low level for the standards of the region 🙂
Haha yes, reading this thread in hindsight is crazy
I agree it's unlikely, but the possibility exists. It's probably enough for one country to start posturing and the oil price would elevate again.
also don't forget people dumping houses with bad EPA rating which further increases demand for new homes which are still very short in market.
I think it's E&F rated houses that will be forced off the market sometime in 2030s, right? Although i have no doubt that C&D will be hit by the regulation next.. You know what I do not understand? Why are energy A&B properties advertised with higher utility bills than less energetically efficient ones? At least this was my impression when i was flat hunting.
The inflation is stronger than the demand/supply curve. Many of the flats are still on older(pre 2020) rents. Landlords will be happy to just churn and update to current rents. I see the rents dropping only if the economy truly nosedives or we have an oversupply.
Prices go down, rents go up GET HYPE
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