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PROPERTY

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?
Austria's property market has been booming for two years, but there are signs that demand is decreasing. (Photo by Jacek Dylag on Unsplash)

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.

FOR MEMBERS: IN FIGURES: Everything you need to know about who lives in Vienna

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.

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RENTING

What’s changing for tenants and homeowners in Austria in 2023?

Whether additional aid or improvements in tenancy laws, here are the most significant changes which home renters and owners in Austria need to know about.

What's changing for tenants and homeowners in Austria in 2023?

Households to get €400 aid for heating costs

The Austrian government has agreed on additional aid to cushion high heating costs, with the payout being distributed by the provinces. 

The total amount will be transferred to the regions based on population to add to existing local subsidies. The federal aid would amount to between €200 to €400 extra per household.

The heating subsidy is intended for lower-income families, minimum pensioners and welfare recipients. It will be available whether they heat with gas, electricity, pellets or another fuel. 

READ MORE: Austria to offer extra €400 for heating costs to low income households

Residents in Vienna to get €200 aid

The City of Vienna is sending out bonuses of €200 to households to help cushion the effects of rising energy costs. Viennese households will receive €200 in a new “energy bonus, ” which will benefit about two-thirds of all city homes.

Single households with a gross annual income of a maximum €40,000 or multi-person households with an income of up to €100,000 gross per year are entitled to receive the payment. 

READ MORE: Vienna Energy Bonus: How to get a €200 payout

No more ‘Provision’ payments

From July 1st, 2023, the Bestellerprinzip (buyer’s principle) will apply to apartment rentals, meaning those who hire a broker will pay for the service, as The Local reported.

Currently, renters need to pay several fees when moving into a new apartment, including a security deposit and the first month’s rent.

Unless the property is rented “privately” by the owner without the brokerage firm intermediate, one of those fees includes the so-called ‘Provision‘, a brokerage fee paid by the tenant equivalent to two-months rent. The tenant pays the cost even if the property owner hires the brokerage firm. 

That is set to change on July 1st 2023 when the person who hires the service will have to pay for it.

READ MORE: CONFIRMED: Austria to scrap broker’s fee on apartment rentals in 2023

A possible rent freeze

Austria’s Social Democratic Party (SPÖ) plans to introduce a motion for a rent freeze that would prevent rent increases until 2025, as The Local reported.

Details on the plan should be debated in the party’s next meeting on January 24th. However, the opposition party has already advanced the main point of their proposal: “all rents should be frozen until 2025”. The measure comes as high inflation and increasing energy prices pressure tenants in Austria. 

The SPÖ also wants to change the index used to adjust rental prices in Austria. Currently, rental adjustments are based on the consumer price index, which is tied to inflation. 

However, the centre-left plans to propose that prices be adjusted on the key interest rate of the European Central Bank instead – and that they be capped at a maximum of 2 percent. 

READ MORE: What are Austria’s Social Democratic Party’s plans for freezing rents until 2025?

The electricity price brake

Austria will have a price cap for electricity throughout 2023 (it has been in place since December 1st and should last until June 30th 2024). 

The price of electricity will be subsidised up to a consumption of 2,900 kilowatt hours, the government said. Until that limit, it will cost only ten cents per kilowatt hour – the energy price from before the current energy crisis.

Above that consumption limit, people will have to pay market prices for what they consume.

The Austrian government estimates that the measure will help Austrian homes save from €400 to €800 on energy bills a year. The Finance Ministry added that the average household’s savings would be €500.

READ MORE: How could Austria’s new electricity price brake benefit you?

Salzburg has new stricter laws for property-buying. (Photo by Heinz Klier / Pexels)

New property laws in Salzburg

After years of high interest in property in Salzburgerland (especially in the winter tourism areas) followed by rising prices, the state government has decided to tighten the law.

This means when someone buys a house, apartment or building land in certain districts in Salzburg, they have to prove that it will be their main residence (Hauptwohnsitz). Purchasing second homes (Nebenwohnsitz or Zweitwohnsitz) or holiday homes in Salzburg will only be permitted in designated zones.

If several requirements are not met by the deadlines, there is a risk of foreclosure and the property or land being sold at auction. The money from the sale will go to the owner, but auctions will start at 90 percent of the estimated value.

READ MORE: Property in Austria: Can I still buy a holiday home in Salzburg?

Property prices to fall

Experts have said that they expect prices to fall across the entire property market in Austria in 2023 – although it might not increase transactions in all segments. Predictions for the year are that the market will definitely slow at the lower end.

The scenario will also depend on the geopolitical situation, especially the war in Ukraine and its repercussions, experts told The Local.

READ MORE: What experts say will happen to the Austrian housing market in 2023

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