Image: Wodicka
Residential real estate prices in the euro area have risen significantly faster than average net earnings in recent years. This is shown by an analysis by Bank Austria: “The average net income in relation to real estate prices has lost around 13 percent in value since 2009, in Austria even by almost 40 percent,” says the bank’s chief economist, Stefan Bruckbauer. Since mid-2022, the monetary policy of the European Central Bank would have further aggravated the situation.
However, Bank Austria’s calculations show that the main reason for the lower affordability is not the interest rate development, but the drastic increase in real estate prices. Prices in the euro area were 45 percent higher in 2022 than in 2009, which means an average annual increase of three percent. Estonia is the leader with 9.1 percent per year, followed by Luxembourg with 7.2 percent. Austria follows in third place: In this country, real estate has become more expensive by an average of 6.6 percent every year. The square meter prices for a newly built property reached a top position in Europe in 2022 at around 5200 euros. On average, the purchase price of residential real estate is higher than in France and Germany.
According to Bank Austria, an Austrian household would need an average of 6.5 net annual salaries in 2022 to buy a newly built residential property with 100 square meters. However, that is less than what would have to be paid for in Germany or France.
Source: Nachrichten
