How does the Austrian property market look like in 2016? Should you sell your property in Austria? It’s difficult to say, because the Austrian economy looks very stable and looks like it is on a steady path to growth.
Austria is a very safe country, with a remarkably low crime rate. The people of Austria are very friendly to foreigners. Austria is a free market economy and has an open society. It is one of the most stable countries in Europe, both politically and economically.
But it is also a fact that property prices in Austria are at the highest point they have been for many years. While the 2008 recession never really affected Austria, it does look like property prices have risen more than they should, thus sparking talk of a possible housing market bubble.
The talk of a housing market bubble is unusual in Austria, where the market is stable and things move very slowly. The Austrian government makes a conscious effort to discourage all sorts of speculative activity in real estate.
Indeed, while the 2008 recession pushed a lot of people away from investing in real estate, in Austria, it had the opposite impact. A lot of Austrians began investing more in the property market than in stocks, as they felt this to be a much safer avenue for their investments.
Fast forward to 2016, property prices have risen across the country. This has made investing in real estate almost impossible for young Austrians looking to buy their first apartment in Vienna. Vienna in particular has emerged as one of the most expensive cities in the world.
An average apartment in Vienna costs EUR 7,000 per square metre, this is not as high as in London, but still quite a lot. For sure, apartments in Vienna are much cheaper than comparable properties in New York, London or Paris, but they are still very expensive and beyond the reach of a vast majority of young Austrians.
Indeed, this has created a situation in Austria, where the only people who can dream of acquiring properties in some of the country’s most sought after neighbourhoods are those very wealthy or born into wealth.
For the average Austrian, the only real option is to opt for a rented accommodation. So a majority of Austrians have been priced out of the real estate market as a consequence.
What about foreign investment in Austrian real estate? Austria has always been a magnet for wealthy individuals from Eastern Europe. Many feel confident about moving their assets to Austria and investing in properties here. They are also attracted by the cultural similarities that they share with the people of Austria.
Austria does get a lot of interest from Russia, but that’s a part of the problem. What’s been hurting the real estate market in Austria is the decline of the Rouble, which has meant that a lot of Russians who wanted to buy properties here have decided to hold back.
This has certainly worried real estate observers in Austria, and many have advocated marketing properties to people from other emerging nations such as China, Malaysia, Brazil, India, etc.
It has been a relief to many that the conflict in Crimea between Ukraine and Russia is dying down. This should halt the decline in the Russian economy by a bit, and convince more Russians to invest in overseas property. It still remains to be seen if Austria benefits from this.
But there is no question that Russian buyers are very important to Austria’s property market. 40% of the sales in the priciest neighbourhoods in Austria were made to the Russians and Eastern Europeans.