(CS) Whether renting an apartment or buying a home, real estate prices in Luxembourg saw a steep increase in 2011, the latest “Observatoire de l'habitat” report finds.

However, there does seem to be a preference for apartments in the Grand Duchy, as sales increased by 11.2 percent, in comparison to an increase in house sales of 1.2 percent over the same time.

With apartments in high demand, prices in 2011 increased by a whopping 6.86 percent for older apartments and 9.14 percent for those still under construction.

Meanwhile, real estate listings for future sales show an increase of 2.27 percent for house asking prices and 5.58 percent for flats. Indicators for rent prices foresee an even higher increase, with a 7.85 percent surge in rent prices for houses and 10.09 percent for apartments. So, the trend towards higher prices continues.

More people and lower interest rates

With more and more people coming to Luxembourg, but less and less people leaving, demand for living space is one of the key reasons for the increase in prices, according to the “Observatoire de l'habitat” which was founded in 2003 to collect data for the housing ministry.

Indeed, since 2005 Statec has recorded an average surplus of 6,000 inhabitants every year, between people coming to and leaving the Grand Duchy. In 2011, this number rose to just over 11,000.

Additionally, low interest rates and good loan conditions caused an increase in potential buyers on the real estate market.

Centre and south the most expensive

On average, the asking price for a house was 597,785 euros, which equals 3,375 euros per square metre. Some 51 percent of houses for sale were located in the centre and south of the country.

The most expensive communes for houses were Strassen, Niederanven, Bertrange, Walferdange and Schuttrange, where the average asking price was above 4,300 euros per square metre and asking prices of more than 830,000 euros for a house.

The cheapest houses were found in the north and west of the country, especially Wiltz, Weiswampach, Heinerscheid and Tandel. Here, the average price was only 2,500 euros per square metre.

Over 5,300 euros per square metre in the capital

Only 6 percent of houses for sale were located in the capital. However, the capital boasted around 20 percent of the country's apartment for sale. Some 74 percent of apartments for sale were located in the centre and south combined.

The average price for an apartment for sale was 365,000 euros, which equals around 4,115 euros per square metre.

Luxembourg City was the most expensive commune with an average price of 5,301 euros per apartment square metre, followed by Strassen, Bertrange, Niederanven, Kopstal and Leudelange.

As with houses, the cheapest apartments were available in the north and west of the country.

More real estate listings with apartment offers on the rise

On the whole, the number of real estate listings has increased dramatically. Some 17 percent more houses were on offer in 2011 than 2010, in comparison to 10 percent more apartments.

The “Observatoire de l'habitat” counted around 81,000 real estate listings for 2011, with 79 percent for the sale of apartments and houses, and only 21 percent for real estate for rent.

Of the “for sale” listings, 67 percent were for flats and 33 percent for houses.