Editorial - The forgotten role of housing shortages in the social dialogue

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It's a sad running joke in the Journal editorial team: in Luxembourg, it's impossible to have an in-depth discussion about any issue without it eventually circling back the housing crisis. This was confirmed once again during the pensions debate, which has now been shelved for the time being thanks to the government's power play.

After all, the most important purpose of pensions, which was at the heart of the meetings, is – whichever way you spin it rhetorically – the prevention of poverty in old age. And poverty in old age and home ownership are closely intertwined.

For a long time, buying a house was part of the middle-class lifestyle and went hand in hand with financial and social security in old age. Those who were unable to do so rented until they had enough to buy their own home. Over 63 per cent of Luxembourgers own one or more properties. Whatever happens, they will not end up on the streets. But for everyone else, buying a home is becoming an increasingly distant prospect. However, the stopgap – renting – is now so expensive that saving is hardly possible.

This is because Luxembourg's rents are extremely high by international standards. Luxembourg City leads the way, where rents are the most expensive in the EU, a good ten per cent ahead of Paris or Dublin. Putting money aside until it is possible to buy a house is therefore no longer a reliable option – even when property prices are not rising for once, rents continue to climb merrily. And even then, what is the point of saving if property prices are rising faster than you can squirrel money away? For many, the grim reality is that their future – and quite possibly smaller – pension will be swallowed up almost entirely by rent.

A look at Germany shows how problematic this can be: The rate of property owners there is around 42 per cent. At the same time, poverty in old age, which stands at around 20 per cent, is a serious and widespread social reality in Germany. Rent and pension are a dangerous combination. Evening rounds to fish deposit bottles out of rubbish bins are a must for many pensioners. Money that goes straight into the pockets of their landlords. For those affected, it is a financial dead end from which there is no way out.