"Trend Reversal" in the Real Estate Market, Rental Market Still Under Pressure

Since mid-2022, affordability has increased by 27 percent according to Raiffeisen Research, making residential properties as affordable as they were in early 2018. "The ice age in the Austrian real estate market is over," Reith expressed confidently. In the first half of the year, however, real estate prices also rose for the first time again - compared to the end of 2024, prices increased by 0.3 percent.

"Year of the Turnaround" in the Real Estate Market

"Rising incomes and plummeting completion numbers with a growing population speak for rising prices," it continued. However, hardly any foreseeable falling interest rates would prevent "the trees from growing to the sky." Reith spoke of a "year of the turnaround." For 2025, Reith expects an average residential property price increase of 0.5 percent, and for 2026, an increase of 2.5 percent.

Rental Market as the "Big Winner"

The return of high interest rates along with stricter rules for lending - keyword: KIM regulation - have, according to Reith, "thrown a wrench in the works" for many potential property buyers in recent years. Coupled with population growth, this has had corresponding effects on the real estate market: "The dream of owning a home has been dreamed longer in rental apartments since autumn 2022," said the expert. In the second quarter of 2025, 6,000 fewer households lived in ownership than in the third quarter of 2022 - a decrease of 0.3 percent.

"The big winner was the rental market," summarized Reith. At the same time, he pointed to rising rents - especially in districts with high population density and demand. According to the economist, interventions in the rental market would only address symptoms. "The real problem is the shortage of housing," emphasized Reith, "and this will not be reduced by interventions in the rental market, but on the contrary, it will be increased." The supply of rental apartments on the market would subsequently decrease.

Reith also explained that while rents have risen significantly over the past 20 years, incomes have as well. In relation to wages, rents have only become 0.3 percent more expensive, he emphasized.

A "Delicate Plant"

Hans-Christian Vallant from Raiffeisen Bausparkasse can only confirm that the past years in the real estate market have been very difficult. He reported declines in financing performance of over 60 percent. However: "The market is coming back," emphasized Vallant. In the first three quarters of 2025, there were growth rates in the net data of well over 50 percent compared to the same period last year. However, it is still a "delicate plant that is growing, we are still far from normal years," he admitted.

Furthermore, the "purpose" has shifted in recent years, said Vallant: "Previously it was new construction, today it is the purchase of existing properties and renovations." The share of new construction in the allocation of new loans is only 12 percent. Due to the reluctance of private investors and the public austerity measures, Vallant also sees the future in non-profit housing construction.

(APA/Red.)

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