“Cool down instead of blowing up” – that’s what Remax Austria Managing Director Bernhard Reikersdorfer and expert Anton Nenning expect this year on the real estate market in Austria. For the first time since 2015, prices are not likely to rise this year, but rather fall – albeit at a high level. Previously, it had gone up eight years in a row. Upper Austria is also swimming with the national trend.
“It’s a situation we’ve never had before,” said Nenning, referring to the figures in the current forecast (see chart). The 600 experts surveyed from the brokerage network based in Amstetten are expecting a trend reversal in the market for a number of reasons.
Firstly, the supply is increasing significantly because many sellers have waited because of the price development and held back real estate. But there are also some who are forced to sell for financial reasons. Second, demand is falling, especially in the middle class.
Third, the situation surrounding the pandemic, the Ukraine war, energy prices and inflation are affecting the market. And fourth, the rate hikes by the European Central Bank and the strict lending guidelines in Austria would slow things down. Reikersdorfer: “I assume that there will be some easing in the first quarter.”
Plus for rent and building land
There were first signs of development in the second half of 2022. While demand exceeded supply until the summer, the relationship reversed from around August. “The high price increases of the past few years have come to an end for the time being,” said Reikersdorfer. For comparison: Last year, the average costs for a single-family home in Austria rose by 13.1 percent to EUR 347,313 and those for a condominium by nine percent to more than EUR 257,000.
This year, of the 17 real estate categories examined, 17 are expected to fall in price. Remax only expects a slight price increase for rental apartments in central locations and on the outskirts as well as for building plots. Rental apartments should generally move more into focus, especially in the inner cities.
Commercial real estate is likely to be hit particularly hard. The Remax price expectation for business premises is minus 8.1 percent, for office space the minus is 7.7 percent. Business premises also came under pressure, it is said.
soldier of fortune
Real estate on lakes in demand
The nationwide trend is also evident in Upper Austria. Real estate prices should level off at the level of two to three years ago across all categories. Demand in Upper Austria will fall by ten percent this year after an increase of 4.6 percent in the previous year. According to Remax, the offer will increase by 6.6 percent this year after an increase of 0.9 percent in 2022. This balancing act dampens real estate prices by around 6.6 percent.
In the provincial capital of Linz, too, the days of annual price increases and unlimited market growth are over. Demand in the high-price segment around Mondsee and Attersee remains unchanged. The more luxurious the property, the more demand comes from Vienna, Germany and almost the entire EU, according to Remax.
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Editor Economics
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