Mar 24th 2023
Property market 2023/2024
Property market 2023
Not only has demand for property declined since mid-2022 due to tighter property loans, the energy crisis and inflation, but the price curve is also pointing downwards for the first time. This trend will continue in 2023. However, exceptions are rental flats in central locations and on the outskirts of cities as well as building plots, where a slight price increase is expected in 2023.
Until the middle of last year, it seemed as if the property market in Austria would be able to withstand the multiple crises - supply was very tight and demand was at a historic high. Things have looked different since the second half of the year: A 30% increase in supply and a drop in demand of almost a third compared to the previous year. The main reasons for this are rising interest rates, more restrictive lending guidelines, high inflation and general uncertainty among the population.
The forecast for this year shows that the supply of property will increase by almost 8 per cent and demand will fall by almost 11 per cent.
The sharpest fall in demand of 9.9% is seen in the mid-price property segment, but this is also where the largest increase of 8% in supply is recorded. Prices should therefore also fall the most in this price segment, by around 7.9%. The falling demand is mainly due to the financing difficulties of the middle class. Some are then looking in the lower price segment, while prospective buyers in the lower segment are refraining from buying at all, at least in the short term. The same trend can be seen in the upper and lower price segments, albeit with less intensity.
The strongest decline in demand is seen in the federal states of Tyrol (minus 15.9 per cent) and Vorarlberg (minus 19.3 per cent), while the smallest declines are expected in the western federal states such as Carinthia and Vienna (minus 6.8 and minus 9 per cent respectively). Supply is likely to increase the most in Tyrol (plus 10.8 per cent) and the least in Carinthia (plus 5.1 per cent).
The legal framework for the property market will remain largely stable. The purchase of property is still unproblematic for EU citizens, which makes Austria an attractive investment location. In addition, there are still funding opportunities for renovation and new construction projects that support investments in sustainable and energy-efficient construction methods.
Forecast for the property market in 2024
According to several studies, property prices should fall from 2024 - this should continue for around three years and property prices should fall by around five per cent.
A crash on the property markets is not expected. The reason for this is that the extremely tight supply of residential property should ease by 2024, as many new builds will have been completed by then. In addition, population growth is slowing down.
Another possible reason is an increase in the key interest rate. The long-lasting low interest rates have contributed to the rise in property prices. On the one hand, it has created favourable financing conditions for owner-occupiers and investors. On the other hand, it has made other investment opportunities less attractive, which has only increased the focus on property.
The Austrian property market will remain dynamic and promising in 2023 and 2024. With a combination of high demand, a stable legal framework and the growing importance of sustainability, the market offers attractive opportunities for buyers and investors. Whether as a home or a capital investment, property in Austria is a worthwhile investment.
We at Tirol Real Estate will be happy to provide you with further information and personalised advice. Contact us today to realise your property goals in Austria.
Sources
https://www.derstandard.at/story/2000142986106/anzeichen-fuer-sinkende-preise-am-immo-markt-mehren-sich
https://www.wienerzeitung.at/nachrichten/wirtschaft/oesterreich/2174142-Wohntraum-und-Realitaet.html