Real estate prices continued to soar for 18 years. House and apartment offered a popular and secure investment opportunity. But now things will change.
Since 2004, Austria’s real estate market has only known one direction: steeply upwards. Residential property prices have almost tripled in this period. Even properties in need of renovation in poor locations were still being sold well above their value at the beginning of 2022. But 2022 was a special year. The turnaround in interest rates, stricter government regulations and the invasion of Ukraine by Russia and the resulting rise in energy prices have thrown familiar forecasts into jeopardy. Will everything be different in 2023?
The market is at a turning point, says Matthias Reith. The real estate expert Raiffeisen Bank International forecast: “The long party is over, but a hangover is unlikely.”
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Price increases had already come to an emergency stop in the second half of 2022. In the third quarter, house prices rose from the previous quarter, according to the Austrian National Bank (OeNB) still – but only by 0.3 percent. Used condominiums in Vienna even got a little cheaper.
A new era?
Reith now expects residential property prices to fall in 2023 and 2024, but he does not see “a phase of longer-lasting or deeper price corrections”. “So the steep climb should not be followed by a dive.”
So is it still worth investing in?