The concentrated ownership of residential land affects housing production in Luxembourg

What is it about?

The issue of land and its ownership remains under-explored in relation to the housing affordability crisis. We argue that the concentrated ownership of residential land affects housing production in Luxembourg through the interplay of landowner and developer wealth accumulation strategies. Drawing on expert interviews, we first show that the country’s growth-centred ecology has produced a negotiated planning regime that does little to manage the pace of residential development. Through an investigation of the development of 71 large-scale residential projects since 2007, we then identify the private land-based wealth accumulation strategies this facilitative planning regime enables. This analysis of land registry data identifies land hoarding, land banking and the strategic use of the planning system. The Luxembourg case – with its extremes of land concentration, low taxes and public disengagement from land – provides a glimpse at the influence of landowner and property developer strategies on housing affordability free of the usual mediating impact of the planning system.

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Why is it important?

In this article, we position affordability as caused by low housing supply in a context of rising demand for housing. However, instead of pointing to the responsibility of planning and other regulatory apparatuses in this low supply, the focus is on the multiplicative interplay of private individual landowner and property developer strategies. We argue that these strategies, which foreground land-based wealth accumulation over the production of housing, are a central mechanism through which housing becomes unaffordable. In a context of high housing demand, these strategies to restrict housing production feed into house price growth and deteriorate access to homeownership and rentals for an increasingly larger proportion of the population.