Renters in Luxembourg spend 40% of their income on housing, according to the latest report from the Housing Observatory published on Thursday, which warned that affordability pressures are intensifying across the market.
Researchers from the Luxembourg Institute of Socio-Economic Research (LISER) found that private-market tenants devoted 39.3% of their income to housing costs in 2023, up sharply from 31.8% in 2016, the steepest increase among all tenure types.
The burden was even heavier for low-income households, who spent over 55% of their income on rent and utilities, a jump of 15 percentage points in just seven years.
“These figures confirm that renting in Luxembourg has become a major financial strain for a growing share of households,” the report said. “For many, housing costs now absorb more than half of disposable income.”
Single adults and single parents are among the most exposed. In 2023, single tenants spent 43% of their income on housing, while single-parent households faced a staggering 50%, reflecting both high rents and limited access to affordable alternatives.
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Flexible living gains ground as affordability erodes
The share of furnished room listings rose from 11.6% in 2022 to 18% in 2025, the Observatory found, noting that this reflects growing demand for temporary and lower-cost housing.
This trend, LISER researchers note, points to “a structural adaptation of the market”, as younger workers, recent arrivals and those priced out of traditional leases seek flexible living solutions.
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Homeownership still dominant
Luxembourg remains a nation of homeowners: 66% of households owned their homes in 2023. But the number of renters has surged 60% since 2013, twice the pace of growth among homeowners.
In its conclusions, the Observatory also says that Luxembourg’s housing dynamics now resemble dense metropolitan areas such as Paris or Greater London, rather than the national averages of neighbouring states.
Average asking rents reached €37 per square metre in 2024 – compared to €32/m² in central Paris – cementing the capital’s status as one of Europe’s priciest rental markets.
Unlike its neighbours, Luxembourg has few mechanisms to moderate rent inflation. Social housing represents just 2% of the residential stock, far below France’s 18% or Belgium’s 7%, the Observatory noted.
The Observatory warns that the growing housing cost burden “risks eroding the benefits of Luxembourg’s strong economy” and widening inequality.
Despite high average incomes, many renters face living conditions more typical of major urban hotspots than of the country’s neighbours. Without a faster expansion of affordable and public housing, researchers caution, “access to decent housing will remain out of reach for an increasing number of households.”
