According to a preliminary analysis by Statistics Austria published on Monday, the number of residential property purchases fell by 28.2 percent compared to the previous year. In particular, purchases of new living space fell by more than half (minus 51.6 percent). The number of existing home transactions fell by 20.7 percent.
During the same period, the long upward trend in real estate prices came to an end. According to Statistics Austria, in 2023, purchase prices of houses and apartments fell by an average of 2.6 percent across Austria. Prices of existing residences were 3.7 percent lower than a year earlier.
New properties are practically the same price
However, new flats and houses fell by only 0.1 percent. The decline was greatest in Upper Austria, Vienna and Lower Austria.
There was a significant increase in existing living space in previous years – an average year-on-year increase of 13.1 per cent in 2021, and an increase of 11.6 per cent in 2022. In the previous year, prices fell: 4.3 percent decline for existing apartments, minus 3.1 percent for existing houses. In contrast, prices for new apartments and houses remained nearly constant over the past year.
The great west-east divide
However, there were large regional differences in newly built apartments. In Vienna, prices fell by an annual average of 3.7 percent compared to 2022, and by 1.7 percent in the rest of Eastern Austria (except Vienna). However, prices rose by 6.9 percent in Western Austria and 4.2 percent in Southern Austria. Prices for new homes in Austria fell by an average of 0.9 percent.
A similar picture emerges when looking at overall housing prices (new homes and existing properties). Vienna recorded the most significant declines at minus 6.7 percent, Lower Austria at minus 4.9 percent and Upper Austria at minus 4.4 percent. In Burgenland and Vorarlberg, house prices fell by 2.2 percent and 1.3 percent. Inflation increased in Styria (plus 0.7 percent), Tyrol (plus 1.3 percent) and Salzburg (plus 1.4 percent). The increase was 2.1 percent in Carinthia.
Unaffordable for many
The decline in real estate purchases is not due to a change in attitude among Austrians. Erste real estate subsidiary Real released a survey last week showing that more than 60 percent of those surveyed prefer to own an apartment or house instead of renting. Of course, with the current high interest rates and even higher prices, this option has become a long way off for many.
Often only possible through heredity
As Karina Schunker, managing director of real estate agent EHL, said in mid-February, “affordability” is still difficult. The buyer target group has narrowed considerably – for example, to customers with inherited assets who meet the 20 per cent equity and monthly loan installment threshold.
Daniel Riedl, board member of German BUWOG parent Vonovia, does not expect major changes for potential home buyers in the near future. For private buyers or households, an interest rate cut by the European Central Bank (ECB) over the summer – half a percentage point – won't change much. Reidl says the monthly loan payment may drop from 2,700 to 2,500 euros, but still a far cry from the 1,500 euros of two years ago.
