Change in the property market leads to price stabilisation

The Engel & Völkers Market Report 2023 for residential property in Austria shows that although transaction figures have declined in recent months, prices on the Austrian residential property market remain largely stable. Overall, prices for condominiums rose by 8.9% in 2022 and by 1.7% for single-family homes, although the price increases were significantly more location-dependent than in previous years. However, the price slump on the property market expected by some did not materialise. The price trend in the first half of 2023 is also stable, with only isolated price corrections expected.

The residential property market has seen a noticeable decline in transaction volumes since autumn 2022. In the first half of 2023, there was a year-on-year decline of 25% in the flat segment, while single-family homes recorded a fall of 21%. Nevertheless, the average price per square metre for flats fell only slightly to EUR 4,500 during this period, while the national average for single-family homes remained stable at EUR 3,900. It can be assumed that prices will continue to develop steadily in the coming months, especially in very good and good locations.

‘The current situation offers real opportunities for buyers to acquire their dream property at a good price due to a larger supply - an opportunity that was not available in previous years due to a lower supply. A decline in completions is expected in the coming years due to the high construction costs, which will have a price-driving effect on property prices again in the medium to long term,’ explains Sylvia Verdorfer, Area Manager for Austria at Engel & Völkers.

Vienna's housing market: only a slight slowdown in the federal capital

Once again the most liveable city, Vienna continues to record strong population growth. The property market cooled slightly in 2022, but in the second half of 2022 prices per square metre rose again to over EUR 6,600, especially in prime locations within the Gürtel. By contrast, prices fell in the outer districts, particularly in basic locations. Demand and prices in the luxury segment remain strong.

‘The macroeconomic situation and the quality of property locations are becoming increasingly decisive for long-term property values. An outlook for the second half of 2023 shows that the Vienna market will experience high demand for residential space due to the continuing influx of people from Austria and abroad. Despite a decline in transactions, prices per square metre, especially in the city centre, are slightly above the previous year's level,’ explains Roland Schatz, Head of Sales at Engel & Völkers Vienna.

Lower Austria: Vienna's suburbs continue to grow

Lower Austria benefits from its proximity to Vienna and is characterised by stable market development despite the current interest rate situation. The price structure of the Lower Austrian property market shows clear differences between the areas directly surrounding Vienna, including Mödling, Baden and Klosterneuburg, and the rural areas in the west. The average sales price of condominiums in Mödling rose slightly year-on-year from EUR 4,250/m² to EUR 4,400/m² in 2023, while prices in Klosterneuburg fell slightly year-on-year from EUR 4,800/m² to EUR 4,700/m² in 2023.

‘Although prices per square metre have stagnated in many districts since mid-2022 and there have been isolated price corrections, prices in the Vienna suburbs will remain stable in 2023 and have even risen in some cases. Properties with good transport links to the metropolis continue to enjoy high demand. Prices for condominiums in prime locations, such as in Baden with a price of EUR 7,140/m², are expected to continue to rise,’ emphasises Oskar Beirer, Managing Director of Engel & Völkers Lower Austria. There is also a growing awareness of the quality and energy efficiency of existing properties, which will play an increasingly important role in future purchasing decisions.

Styria: Stable prices at a moderate level - sustained demand in top locations

The price level in Styria continues to develop moderately, with only Burgenland showing more favourable average prices. In an international comparison, Graz is the cheapest city in Europe in relation to income. ‘Contrary to expectations, selling prices for flats did not fall in 2022, but remained very stable or rose slightly in some cases. The average price per square metre for condominiums in Southern Styria was just under EUR 2,900 in 2022, while the price for detached and semi-detached houses was EUR 250,000,’ explains Harald Martich, Managing Director of Engel & Völkers Styria.

This trend has continued since the beginning of 2023, with prices moving sideways at a moderate level. ‘With an average price per square metre of EUR 5,000 to EUR 7,500 for new-build condominiums in very good locations, the property market in Graz is still reasonably priced compared to other major cities,’ Martich continues.

Demand in prime locations will continue, while price corrections are only expected in basic locations. Demand for exclusive second homes and holiday properties in Southern Styria and the Alpine region remains high. Prices of EUR 800,000 to EUR 1,400,000 can be expected for detached and semi-detached houses in very good locations in the southern Styria region.

Lakeshore and silent marketing in Carinthia more sought-after than ever

In contrast to other regions, significant price increases were recorded on the Carinthian property market in 2022. The condominium segment in particular saw considerable price growth to an average of EUR 4,500/m². A slight decline in demand and a longer marketing period can only be seen in the mid-price segment due to more difficult financing conditions. ‘The demand for first-class properties in prime locations with lake views, lakeside locations or mountain panoramas remains unbroken. There is a noticeable trend towards discreet and silent marketing, known as ‘silent marketing’, among owners of exclusive properties,’ reports Hansjörg Lenz, Managing Director of Engel & Völkers Carinthia.

The future price development on the property market in the southernmost federal state is heavily dependent on location. Demand for first-class lake regions and high-quality alpine chalets continues to rise. In the sought-after Upper Carinthia-Millstättersee region, prices per square metre for condominiums in very good locations are expected to be between EUR 6,500 and EUR 9,000 in 2023.

‘Prices for the Lake Wörthersee/Lake Ossiachersee region are expected to be in the range of EUR 6,500 to 18,000/m² for condominiums in top locations, which means that the Wörthersee shore will continue to be one of the top prices in Austria. Due to the still moderate pricing and attractive offers, the Lower Gailtal, the Rosental and the districts of St. Veit and Feldkirchen are also developing very positively. The market forecast also shows that supply will exceed demand in the next one to two years due to the low number of completions. This will lead to buyers increasingly focussing on the renovation of old properties through ‘upcycling’,’ adds Lenz.

Salzburg: strong demand thanks to attractive city location and panoramic views

The Salzburg property market continues to enjoy strong demand thanks to its attractive city location, panoramic views and proximity to lakes and continues to offer potential for growth. Due to the interest rate trend, which is hardly noticeable in A-locations, sales in the detached and semi-detached house segment fell slightly in 2022. The average price for condominiums has been at EUR 5,800/m² since the middle of last year, but prices for condominiums have risen slightly from EUR 6,433/m² in Q2 2022 to EUR 6,600/m² in Q2 2023. In the detached and semi-detached house segment, prices fell slightly from EUR 1,562,000 in the second quarter of 2022 to EUR 1,300,000.

An outlook for the second half of 2023 and initial trends for 2024 continue to indicate a stable to positive market trend in good and very good locations. Further price corrections are possible in simple locations in the short term.

‘The past market changes have left their mark on the city of Mozart. Nevertheless, there are increasing opportunities to acquire highly attractive properties, which opens up the possibility of building up wealth across generations,’ explains Mark Hüsges, Managing Director of Engel & Völkers Salzburg. Rising sales prices for detached and semi-detached houses in very good locations of EUR 2,000,000 to EUR 17,000,000 and stable prices of EUR 800,000 to EUR 2,400,000 in medium locations are expected in the coming months.

The exclusivity of the Salzkammergut region remains in demand

The development of new high-quality projects in the Salzkammergut is creating new attractive residential locations that are characterised by the exclusivity of direct access to the lake or connected bathing areas and generous open spaces. In the lakeside locations segment, top prices of over EUR 10 million were achieved for detached and semi-detached houses, while the average price for condominiums in 2022 was just under EUR 5,000/m². For 2023, a price range of EUR 1,500,000 to EUR 9,500,000 is forecast for detached and semi-detached houses in very good locations, while a stable price trend of EUR 850,000 to EUR 2,500,000 is expected for mid-range locations.

Tyrol: High demand in the premium segment and for new builds

Increased supply has led to a cooling of the Tyrolean property market and at the same time given buyers more room for negotiation. Despite rising interest rates, prices per square metre have continued to rise overall. In 2022, the average sales price for condominiums exceeded EUR 6,000/m² for the first time, while it stood at EUR 933,000 in the detached and semi-detached house segment.

In the first half of 2023, there are signs of a short-term bottoming out due to the current interest rate situation, lower demand and a decline in new construction activity. This will temporarily lead to a severe shortage. However, a look at the second half of the year shows a renewed increase in transaction figures with a market that remains stable, high value stability in prime locations and only minor price corrections. ‘Properties in premium locations remain popular and are characterised by their quality of life and stable value. Due to the increased supply, it is currently a favourable time for buyers, as properties are on the market that were not available in recent years,’ explains Florian Hofer, Managing Director of Engel & Völkers Tirol and Zell am See.

Prices in Tyrol show a diverse price spectrum, with Kitzbühel remaining the top region in the province in 2023 with prices per square metre for condominiums ranging from EUR 7,000 to EUR 28,000 and prices for detached and semi-detached houses from EUR 1.5 million to EUR 28 million. ‘Properties in premium locations act as a crisis-proof investment and are an important component of asset protection against inflation for many high net worth individuals,’ concludes Hofer.

Sources for prices and transaction figures:

Immoservice Austria/terravistor GmbH, ZT datenforum, Engel & Völkers Residential