What's New in Austria
The Housing Market in Austria Continues to be Buoyant in 2017/2018
The article topic Property Market in Austria, Property Purchase in Austria
11 Mar 2018
The economic and financial conditions remain solid for the growth of the housing market. According to the International Monetary Fund, Austrian economy grew by 2.3% in 2017, a notable increase from the 1.5% in 2016 and in fact the fastest acceleration since 2011. In 2018, the IMF expects a growth of 1.9% which is still an encouraging number that testifies of increasing consumer demand and purchasing power. Housing loans interest rates remain close to historic lows thanks partly to the current European Central Bank’s core rate policy which is unlikely to change until 2019. Although the Austrian mortgage market remains relatively small compared to the EU average at c. 29% of GDP, with the continuous low interest rates the number of people using a mortgage to finance the purchase of a house is increasing thereby resulting in higher demand for new housing.
The increased demand has impacted the housing prices that have continued to rise in 2017 and based on the figures of the Oesterreichische National Bank the residential property price index has grown by 4.7% (2.45% in real terms) in 2017. It is interesting to note the difference between Vienna and the rest of Austria. Whilst in the capital house prices rose only modestly by 0.32% (so they actually fell by 1.84% in real terms), the rest of the country registered a much more significant house price growth of 7.39% (5.08% in real terms). It seems that following a strong price growth of house prices in the capital in the years following the financial crisis, we will now face a slight slowdown of the housing market in Vienna with the prices in the rest of the country catching up with this trend in a more stable mode.
The value of property transactions continue to rise, supported by interest from foreign buyers. Eastern European buyers in particular are attracted to the country which continues to be a solid investment option thanks to the stability of its property market and economy, but nationals of other EU and increasingly non-EU countries are also discovering the investment potential the Austrian housing market represents and the quality of the newly built developments that require minimal maintenance and easy no-hassle letting management.
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