The rapid rise in interest rates from mid-2022, the high inflation and the two-year recession: these are the main reasons why the real estate industry, which has been doing well for years, has started to stutter massively.
Gerald Gollenz, chairman of the real estate trustees in the Chamber of Commerce, had already said in June that the new construction market was dead. Yesterday, Tuesday, he became even more drastic at a press conference: “Nothing has changed, on the contrary, the new construction market is more than dead. “It’s about the existence of thousands of companies and their employees. His deputies in the trade association, Michael Pisecky and Johannes Wild, put it similarly: “The situation is very dramatic,” and: “We are hitting the wall.”
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Less than 2000 units
The representatives of commercial developers, brokers and property managers backed this up with figures from the market research company Exploreal: According to this, there are 17,381 freely financed condominiums in the “pipeline” across Austria this year – they are being prepared, built or completed. According to the forecasts, there will be 6,406 in 2026 and 1,793 the year after, which would mean a decline of 90 percent. The number of privately financed rental apartments fell from 7,343 to 2,102 and 1,349.
“The 12,000 companies with 26,000 employees have their backs to the wall,” said Gollenz regarding his industry. There will be more bankruptcies. When asked whether real estate companies had not taken precautions, Gollenz said: “They have, but that is only enough for a while.” In addition, there is significantly higher unemployment among the construction companies themselves.
And there is a threat of a housing crisis, says Pisecky. Because Austria’s population is growing, households are getting smaller, so the demand for living space is increasing. “If apartments become a scarce commodity, one thing is clear: it will not be cheaper,” said Gollenz: “Anyone who is thinking about investing in real estate should do so today.” The forced trend from owning to renting is already bringing upward pressure on rents .
Together with non-profit developers and other housing models, 40,000 to 45,000 apartments per year were/will be built in Austria from 2022 to 2024. According to Exploreal’s forecasts, this will fall to 24,800 in 2027. “We have not overproduced in recent years, but have built in line with demand – two thirds of which were the commercial developers,” said Pisecky. We still need this volume. Commercial companies are also concerned about affordable housing.
Image: WKO
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Image: WKO
The industry representatives called for “political measures”, above all the two billion euro housing package announced by the federal government at the end of February should be put into practice. “We haven’t seen a cent so far,” said Gollenz. The announcement even led to people who wanted to buy preferring to wait in order to benefit from subsidies. As reported, so far only land registry fees have been temporarily canceled in the residential sector. This has a slight positive effect, says Gollenz.
The KIM regulation (stricter lending rules) should be suspended, and regulations and standards that increased construction costs should be reduced. There are nine spatial regulations and nine building laws, “and we have 5,008 standards that we need so that we can build a building,” said Gollenz. “We need deregulation in order to be able to build more cheaply again,” said Pisecky: “If I renovate a house today, I have to renovate it to new building standards. Why?” By “dusting off” the guidelines, such as the parking space regulations, you could build cheaper by 500 to 700 euros per square meter. Due to the new ordering principle in apartment rentals, thousands of real estate agents are missing “the income they need to survive”. As reported, the broker’s commission must be paid by whoever commissioned the service, usually the landlord.
The officials said several times that they didn’t want to complain. But the situation is partly threatening to existence.
