‘Concrete gold’: Austria ranks as Europe’s second most expensive property market

The average price per square metre for new apartments in Austria rose by 11 percent last year meaning the country has Europe's second most expensive market, a new survey reveals.

'Concrete gold': Austria ranks as Europe's second most expensive property market
The latest Deloitte Property Index shows prices have increased by 11 percent in Austria. Photo by Waldemar Brandt / Pexels.

Consulting firm Deloitte has released its annual Property Index and the 2022 edition reveals what most people in Austria already know – property is more expensive than ever.

Last year, the average price per square metre for a new apartment in Austria rose to €4,782, which is an increase of 11 percent on 2020 prices. And in the first quarter of 2022, prices went up by a further 13 percent.

This makes Austria one of the most expensive property markets in Europe (ahead of Germany and France), with just the UK ranking higher.

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Deloitte’s Gabriele Etzl said: “The Covid-19 crisis and the historically low interest rates unleashed a veritable flight into ‘concrete gold’. 

“At the same time, except for some Viennese districts and small towns across Austria, the supply of new dwellings is scarce.”

The Deloitte Property Index, which is an overview of the European residential property markets, shows that property prices in Vienna increased by 8.2 percent last year to €5,788 per sqm.

However, Austria’s capital is still significantly cheaper than other key European cities. For example, the average price per sqm in Paris was €13,462 and Munich was €10,500.

And while construction activity in Austria has been high in recent years, and will continue to increase throughout 2022, Deloitte expects it to decrease in 2023.

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This won’t impact the property market though with both prices and mortgage interest rates forecast to keep rising throughout this year and next year in Austria. 

Similarly, the affordability of purchasing a home in Austria is not expected to improve in the coming years, although that is the same for most European countries with the exception of Croatia, Spain and the UK.

For renters in Austria, the picture is a bit more positive as the report predicts rental prices will keep rising throughout 2022 but then stabilise and stay the same in 2023. 

But the average cost of rent in Vienna is still far below other European cities at €8.66 per square metre. The most expensive city for rent prices in Europe was Paris at €29.10 per square metre, followed by Oslo at €26.56 and London at €25.12.

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Is now a good time to buy property in Austria?

With reports that demand for property is falling in Austria, could now be a good time to buy? We take a closer look at the data to find out.

Is now a good time to buy property in Austria?

Anyone planning to buy a home in Austria will be aware that prices and demand have been rising over the past couple of years. 

But Austrian broker association Remax is now saying that demand is falling with signs that “the market is starting to turn”.

In the first half of this year, 74,258 newly purchased properties were registered in the Austrian land register (Grundbuch). This is three percent less than during the same period in 2021, according to data from Remax.

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However, this figure is still 15.7 percent more than in the first half of 2019, which reflects the boom in the Austrian property market since 2020.

Also, despite the number of transactions going down this year, the value is actually up by 10.8 percent to €21.73 billion, which shows property prices are not yet coming down.

Bernhard Reikersdorfer, Managing Director of Remax Austria, said: “The growth was primarily supported by Vienna and Styria, but also by Upper and Lower Austria. 

“This means that real estate trading turnover has increased by a third in the first half of the year since 2019 and 2020, and more than doubled when compared to 2015 and before that.”

‘Inflation is driving up costs’

The Remax report says property market trends in Austria are being influenced by the Covid-19 pandemic, the war in Ukraine, inflation and the energy crisis. 

This has led to a change in prospects for some people, which is being seen as a drop in demand in the property market and a reduction of new construction projects on privately owned land.

READ ALSO: READER QUESTION: When should I turn on my heating in Austria this year?

Anton Nenning, Remax Austria expert, said: “Inflation is driving up the new construction costs – first through the material and now through the staff – and is now gnawing away at the equity capital saved for new acquisitions. 

“This means that many financing transactions that could be processed easily and cheaply a year ago are suddenly a case for selected experts who can still find a way even in tricky situations. For many, however, this simply means a project stop.”

As a result, the market for single family homes in Austria is heating up as they are sometimes cheaper than building a new property on private land. 

What is happening in Vienna?

Austria’s capital city remains the second best performing property region in Austria (behind Lower Austria). The value of all property sales in Vienna increased by one billion in the first six months of 2022, bringing the total to €6.68 billion.

Donaustadt is the best performing property market in Vienna with 1,903 properties sold, followed by Favoriten with 1,096. Donaustadt even overtook Graz and Kitzbühel to record the highest value in property sales.

The five largest real estate transactions in Austria also took place in Vienna during the first six months of the year. 

A plot of land (258,269 m²) in the 22nd district became the country’s most expensive property when it was sold for €86 million.

READ NEXT: Living in Austria: Is Vienna a family-friendly city?

What are the property trends outside of Vienna?

Vienna might be Austria’s capital city, but it doesn’t have the hottest property market in Austria right now. Instead, that title belongs to Salzburg and Styria.

Property sales in Styria are up by 9.2 percent and the overall transaction value has increased by 18.5 percent. In Salzburg, both sales and transaction values increased by 3.6 percent.

In the Alps though, the opposite is taking place with sales down by 10.7 percent in Vorarlberg and by 6.4 percent in Tyrol.

However, Tyrol is still recording some high prices (despite the overall decrease in sales) with the state’s most expensive property selling for €19.6 million in Kitzbühel earlier this year.

Lower Austria is currently the country’s best performing state for the number of sales, although the province recorded a decrease for the first time since 2013. 

The Remax report named Mödling as the most popular district for property in Lower Austria.