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PROPERTY

What experts say will happen to the Austrian housing market in 2024

Experts in Austria are ‘cautiously optimistic’ when it comes to the property market this year. Here’s what you can expect.

Published: 3 January 2024 12:48 CET
Updated: 6 January 2024 08:32 CET
What experts say will happen to the Austrian housing market in 2024
New construction in Austria is falling due to rising building material costs. Photo:HARALD SCHNEIDER / APA / AFP

Austria’s property market will see less decline in demand this year than in 2023, with positive supply growth and price curve turning upwards, according to the RE/MAX Real Estate Future Index (RREFIX), a compilation of the opinions of around 600 real estate experts throughout the country.

According to the experts, the supply of real estate – especially with new constructions – will continue to rise while demand is falling. Prices for residential real estate continue to drop, and any real increase in demand is only expected for rental apartments (more if they are central).

The experts believe the only expected price increases in 2024 will be for new privately negotiated rental agreements. Additionally, falling condominium prices together with rising rental demand “would be a good combination for investors”, the report stated.

FOR MEMBERS: Property buying rules for international residents in Vienna 

As in the expectations for 2023, rental flats are at the forefront of demand for 2024. Demand

for rental flats in central locations will improve from 2.2 percent to 5.9 percent, putting them in the first place. Demand for rental flats on the outskirts of cities will increase by 4.1 percent (2023: 0.9 percent), and those in rural communities are still hoping for a 1.0 percent increase in demand after the 2.3 percent decrease in 2023.

The experts’ tips for buyers

The report also brought tips for those looking to buy property this year in Austria. According to real estate professionals, it’s crucial to clarify your financial options before starting your property search, paying particular attention to conditions and one-off fees for financing. 

It’s also worth checking used residential properties in many Austrian regions, as there is significantly more supply of this type of property compared to new builds. However, before “buying second-hand”, it’s essential to check the maintenance of the building, as well as any monthly operating costs. The experts also recommend reading the minutes of the last owner’s meeting. 

READ ALSO: EXPLAINED: Why people have stopped buying property in Austria

Difficult property buying rules

In 2023, the sales and number of properties sold fell compared to 2022, which was a record year for property sales in Austria, the RE/MAX report stated. According to the experts, the biggest obstacle for the property market is the lending guidelines in Austria.

“They absolutely need to be adapted quickly, as the current regulations often present even higher earners with insurmountable hurdles to buying property at a young age, as evidenced by the figures in 2023”, said Bernhard Reikersdorfer, Managing Director of RE/MAX Austria.

In August 2022, Austria announced new property buying rules, which have been heavily criticised since then, as reported. The aim was to take some heat out of the property market, which meant homeownership became harder than ever. 

The biggest change was that anyone wanting to buy a home in Austria would have to pay a mandatory deposit of 20 percent of the value of a property. With homes in Vienna costing hundreds of thousands of euros – if not more – it meant families would have to pay upfront values such as €50,000 for a small family home in Vienna, for example. 

READ ALSO: Which parts of Austria have the most expensive rent prices?

At the time, bankers called for exceptions for young families. “Where are young families supposed to get 20 percent of their own capital, even if both work, unless mum and dad or grandma and grandpa step in?” said the head of Erste Group, Willibald Cernko.

Another new rule for buying properties in Austria is that mortgage repayments must not exceed 40 percent of a buyer’s income.

According to calculations by ORF, someone hoping to buy a home for €360,000 (an amount which rarely exists in some regions due to high prices) would need a net income of €3,250 per month to qualify for a mortgage. It is estimated that half of all Austrian households would not qualify.

Additionally, mortgages can only be granted for a maximum of 35 years, and loans must not exceed 90 percent of the calculated market value of a property.

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LIVING IN AUSTRIA

‘Haushaltsversicherung’: How does Austria’s home insurance work?

'Haushaltsversicherung' is one of Austria's most popular types of insurance. It is not mandatory, but it is certainly worth evaluating, especially as it comes with many possible add-ons.

Published: 2 May 2024 15:22 CEST
'Haushaltsversicherung': How does Austria's home insurance work?

Austrians are certainly obsessed with insurance coverage, and one of the most popular and common ones is known as the “Haushaltsversicherung”—if you don’t have it already, you have certainly heard of it. Here’s what you need to know about household insurance.

Firstly, this insurance covers damages to “all movable objects within your own four walls,” as Austria’s Chamber of Labour (AK) explains. This includes furniture, carpets, and electrical appliances. It would also cover damages caused by fire, storms, water, burglary, and glass breakage. 

Certain types of insurance, such as private liability insurance or mandatory dog liability insurance, are almost always combined with household insurance—another reason why the Haushaltsversicherung is so popular in Austria.

READ ALSO: What kind of insurance do I need to have in Austria?

However, there are enormous differences in premiums and benefits, so experts suggest you check precisely what you need before taking out insurance. The AK also says you should talk to an insurance advisor to learn more about your specific case and needs, particularly if you have any valuables in your home. 

Additionally, they said: “It makes sense to check your policy every few years to ensure that you are properly insured. This guarantees that the sums insured and the risks included are up-to-date and sufficient”.

What should I keep an eye on when reviewing policies?

Of course, different companies have their own offers, and they are often highly customisable to fit your apartment and lifestyle—some things you need to be aware of, though.

Certain policies are tied to the size of your apartment, while others will have a lump sum regardless of the size of your place. Policies also usually differ depending on whether you live in an apartment or a house. 

While most insurance will cover glass breakage (such as when a hail storm breaks your window, for example), some might have it as an add-on (wahlweise mit Glasbruch). 

You may also add other types of insurance to your household insurance, the most common being mandatory dog liability insurance (Hunde-Haftpflicht), legal insurance (Straf-Rechtsschutz), and sports insurance.

READ ALSO: Should I take out insurance before skiing in Austria?

It’s worth it to read each policy, but you should know some common clauses beforehand. For example, insurance often won’t cover burglary costs if your house has not been properly secured and locked. This might seem obvious, but since door knobs don’t open from the outside without the key, people often leave their homes, especially for short errands, and don’t lock the doors all the way. Insurance and safety experts recommend you get in the habit of locking your home doors.

It’s also important to check if your insurance will pay you “Neuwert” or “Zeitwert” in case of damage. 

A Neuwert means the insurance will pay for a replacement object, regardless of how old the stolen or broken one was. However, many insurance policies still contain the so-called “Zeitwert”, something like “current value”, so you wouldn’t receive an amount that could pay for a new product. Instead, a loss of value of around 10 percent per year could be expected for most objects.

What should I do if there is damage to my home?

If you see any damage to your home from burglary, accident or other types, you need to notify your insurer immediately and report the damage you have suffered. 

The insurance conditions usually stipulate a maximum period of three days for reporting a claim in property insurance. The Chamber of Labour also recommends that you send a written notification of the claim (preferably by registered mail, they add).

“Make a list of all items that have been destroyed or lost and enclose it with your report to both the insurer and the security authorities”, they said. And, of course, in the event of fire burglary or robbery, always inform the fire department or police authorities.

READ ALSO: EXPLAINED: The Austrian insurance for if you get sued – or want to sue someone

How long does the insurance last, and how much does it cost?

The insurance term is usually specified in the counteract. In general, though, you can terminate it after the third year with one month’s notice if the contract has not already expired.

If you move house or move abroad, you can terminate your household insurance contract. You can cancel the insurance the day before the move begins (preferably by registered letter).

If you do not exercise your right of termination, the insurance will remain valid during the move and in the new home.

Regarding prices, they can be as low as a few euros a month (such as insurance specifically tailored to students living in shared flats) to several hundred a month if you have a large place with plenty of valuables or include several add-ons. 

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