Property prices in Tyrol are some of the most expensive in Austria and are showing no signs of slowing down any time soon.
Nationwide, the average price per square metre for an apartment in 2020 was €4,831 and for a house it was €3,360.
But the province of Tyrol recorded the highest average price for an apartment at €5,503, 14 percent above the average, and ahead of the capital Vienna at €5,340.
And Tyrol’s houses are even more expensive. Figures from real estate agents Engel & Völkers show that the average purchase price for a house in Kitzbühel, one of the most sought-after areas, in 2020 was between €6,828.93 and €10,174.07 per square metre.
Clare Woolner, from Manchester in the UK, lives in St. Johann in Tyrol with her Austrian partner. The town is in the Kitzbühel district and is just a 15 minutes drive from the city of Kitzbühel. Clare told The Local they are currently priced out of the property market, which could problems in the future if they want to start a family.
Clare said: “If we saved really hard we probably could afford to buy a property but then we’d struggle to pay for any improvements. Also, the mortgage and monthly payments would be huge, much more than we’re currently paying in rent. So even though renting feels like dead money, buying doesn’t make financial sense for us at the moment.
“In terms of future plans, for me it means either buying a property much later than I had planned and having a much bigger mortgage than I would like or, if I do decide to have a family and want to live in a house, it will mean moving elsewhere.”
In Vienna, the average cost of an apartment in the first quarter of 2021 was €5,370 per square metre and in Graz it was €3,850.
In Innsbruck, the capital of Tyrol, the average cost of an apartment was €6,840 per square metre and the cost of land in the district has gone up by 12 percent in the past year.
But Tyrol also has some of the lowest wages in Austria.
A recent salary report by StepStone shows the average gross national salary in Austria in 2021 is €52,000, but Tyrol was in the three lowest earning regions with an average salary of €49,028, with only Carinthia and Burgenland reporting lower averages.
Those stats are based only on those people in full-time work, while Tyrol’s lower wages can also be partly attributed to a high proportion of part-time workers. Only 47 percent of employees work full-time all year in the province and there is a high percentage of tourism and hospitality roles, which means earnings have been further impacted by the pandemic.
This means that the Chamber of Commerce puts the average salary in Tyrol at €27,312, the second lowest at €1,400 less than the national average, ORF reports. The lower incomes make getting on the property ladder even harder.
Sally Thornton-Helmer from the UK lives in St. Johann in Tyrol with her husband and family. In 2006 they bought a 75 square metre holiday bungalow for €130,000 before buying a 130 square metre house in 2011 for €506,000.
Sally told The Local: “You can hardly buy a three-bedroom apartment for this anymore. We estimate we could sell it for more than double what we paid for it. Crazy.
“If we were trying to buy something today we would not be able to afford a house and given that three-bedroom apartments with a garden are so few and far between, we would certainly have to make some compromises.
“I’m relieved we bought a house when we did and I definitely appreciate just how lucky we are.”
To compare, newly built two-bedroom apartments (approximately 80m2) in St. Johann are currently on sale for around €700,000. A new 40m2 studio apartment, which is advertised as a “leisure residence”, is on the market for €310,000. The asking price of older two-bedroom apartments is around €500,000.
Searching for a detached family house with a garden for less than €1 million is hopeless, but The Local did find a three-bedroom town house in Kitzbühel for €850,000.
Why are property prices so high in Tyrol, and will it last?
The reason for Tyrol’s popularity seems simple – it’s in the Alps and offers a lifestyle that many people aspire to with skiing in the winter and lakeside sunbathing in the summer. Appealing to people from outside the local area often means second-home owners, which can push the prices beyond the reach of native residents.
In fact, earlier this year, Peter Marschall, CEO of Marschall Real Estate, told The Local that luxury property buyers from Germany have been flocking to the Kitzbühel district since the end of the first lockdown in spring 2020.
Marschall said: “People want to own a second home in a nice area. The crisis has highlighted these areas to international buyers more than Vienna.”
This view is echoed by Tyrolean resident Lukas Krainz, a sixth-generation owner of Wieshofer Mühle in St. Johann, who says the “super rich” have been investing in property in the province since 2008.
Lukas told The Local: “Austria is a neutral state and we are not in Nato, so it is seen as a very safe place for investment. Buyers know that the prices are very high in Austria but they can also expect prices to rise in the future as well.”
Fast forward to 2021 and the pandemic is the latest crisis that has prompted people – especially wealthy buyers – to invest in property in Tyrol again. The ability for many professionals to work remotely has also added to the allure of investing in a home in the mountains.
For local residents in Tyrol though, dreams of home ownership are quickly disappearing.
Lukas said: “For young people on an average salary and with no inheritance ahead, I see no chance for them to be able to own their own home in the future.
“You can maybe try places like Kirchdorf or Erpfendorf [two municipalities about 3 kilometres away from St Johann], but quickly – before the prices reach an unaffordable level there too.”
Is this a fixable problem?
With rising property prices largely driven by second home-owners and overseas buyers, the region has attempted to bring in rules that safeguard some properties for locals.
The Tirolean state government recently introduced new laws to ban the construction of new holiday homes (Freizeitwohnsitz) in communities where there are no affordable apartments or inexpensive land, but proper enforcement will be key to their success.
There are already rules in place since 1994 that no more than eight percent of housing stock in a district can be taken up by holiday homes, but in the Kitzbühel district of Tyrol this has not been monitored.
According to the Kronen Zeitung, 80 percent of the municipalities in Kitzbühel are above the legal limits on holiday homes.
Across Tyrol, reports suggest there are currently 10,000 “illegal leisure residences”.
Such homes become illegal when owners claim a property is their main or secondary residence but rarely spend time there.