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PROPERTY

Will 2024 be a good year to buy property in Vienna?

After a peak in property prices in the Austrian capital, some experts now believe the bubble might have burst. But will prices fall even more?

Published: 12 January 2024 13:04 CET
Updated: 12 January 2024 15:48 CET
A view of Leopoldstadt, Vienna.
A view of Leopoldstadt, Vienna. Photo by Andy Wang on Unsplash

Property prices in Austria have gone up for years, peaking just after the coronavirus pandemic – which even led experts to warn repeatedly of a bubble in the country.

With the interest rate turnaround starting in 2022 and changes in the rules for mortgages, the market then went upside down, bringing the real estate boom to an abrupt end. In Vienna, prices have fallen more sharply than in the rest of the country, by as much as four percent in the third quarter of 2023.

So, is now a good time to buy real estate in the Austrian capital, or are prices expected to fall even more?

Overvaluation and excess demand

According to Austria’s National Bank, there is still an overvaluation of more than 20 percent for real estate in the country and 37 percent in Vienna, which means prices could still lower in the months ahead. 

The price increases in the Austrian capital had the same drivers as in major German cities and, according to the experts, if they follow the downward trend of the neighbouring country, could fall further by up to six percentage points. 

At the same time, though, there is a significant excess demand of around 55,000 residential units, according to estimates by Fabian Blasch, analyst at Raiffeisen Bank International (RBI). Additionally, the long period of low interest rates and the low returns on fixed-interest investment strengthened real estate as a safe investment for those who can afford it – fuelling prices still.

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

Population growth

One thing that could cushion the drop in prices – and experts believe it will – is Vienna’s demographic development, which provides a “healthy foundation” for real estate prices, according to statements given by an RBI analyst to Die Presse.

READ ALSO: Austrian property prices continue steady decline throughout 2023

Vienna has seen recent strong growth in its population of around 14 percent.

The German cities of Düsseldorf and Cologne, with similar real price growth, only have population growth of seven percent and eight percent, respectively, according to the report. In addition, the complete slowdown in the construction sector is making housing supply scarcer. 

Still, analysts expect a nominal price correction of a maximum of 15 percent this year and next. “The longer-term outlook for the Viennese market remains favourable,” Blasch told Die Presse.

One thing they agree on: property prices are likely to fall still. How much depends on how each factor will influence the market in 2024.

The experts’ tips for buyers

A RE/MAX property report 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.

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RENTING

How Austria’s new plans to avoid a housing crisis will affect residents

Cheap loans, new builds and tax deductions: here's how Austria wants to increase homeownership and avoid a housing crisis.

Published: 28 February 2024 14:27 CET
Updated: 2 March 2024 06:18 CET
How Austria's new plans to avoid a housing crisis will affect residents

Austria’s construction boom is coming to an end, but demand for housing continues to be high in the country. The combination has concerned the federal government, and the ruling coalition has now announced measures – including cheaper loans, new residential builds along with several bonuses and tax allowances.

The government hopes the measures will help shape Austria’s real estate market in the coming years.

Financing non-profit developers and first-home buyers

The government has announced it will spend €2 billion to stimulate residential construction via non-profit property developers (which build municipal and cooperative housing in Austria). With the money, Austrian states will be able to grant housing loans of up to €200,000 with a maximum interest rate of 1.5 percent for both house builders and future homeowners.

READ ALSO: Why people have stopped buying property in Austria

According to the government, 10,000 new properties will be built and sold, as well as 10,000 rental flats and 5,000 properties will be renovated and brought back onto the market with the earmarked funds.

In addition, families buying their first home will not have to pay certain fees that could help them save up to €11,500. 

As the package aims to heat up the construction sector once again, the federal government claims it will secure 40,000 jobs. 

New taxes and bonuses

In order to help finance measures and prevent a housing crisis in the country, the states will be authorised to levy “recreational housing”, “secondary residence”, and “vacancy” taxes. States with high second-home rates, where residents have a hard time finding homes but tourists flock during high seasons, would particularly benefit from this.

On the other hand, there will be bonuses for “climate-friendly” refurbishments. 

For rented flats, measures relating to thermal refurbishment and the replacement of heating systems will be subsidised for 2024 and 2025 with a tax deductibility supplement of 15 percent. For example, if you spend € 1,000 to improve the insulation or replace windows in your rental apartment, you can deduct € 1,150 as an expense on your taxes later.

READ ALSO: Property buying rules for international residents in Austria

Another bonus, a “tradesman bonus plus” (Handwerkerbonus plus), is set up to incentivise people to do more construction work and renovations. 

In 2024 and 2025, anyone who commissions tradespeople will be able to claim €2,000 in subsidies from the federal government, up to a maximum of 20 percent of the cost of a contract. The bonus can be submitted per (adult) person – a family of four with two children could, therefore, receive €4,000 back from the state for a new patio. However, only one application per year will be permitted. 

Tradesmen’s expenses up to a maximum of €10,000 are eligible. There are to be no restrictions on which services can be invoiced. According to chancellor Karl Nehammer, the bonus will be an “important stimulus for businesses”. 

READ ALSO: Can foreigners buy a second home in Austria?

The federal government’s so-called “housing umbrella” will also be increased: money distributed via the federal states to prevent hardship cases (such as evictions due to a sharp rise in energy costs). According to the government, €65 million is already available for this in 2024. Now, another €60 million will be added. 

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