Austria Among the Leaders in Housing Prices According to Deloitte

Compared to 2023, the average prices for new constructions in the country increased by 2.7 percent. Deloitte describes this as a "stabilization at a high level," facilitated by inflation-related construction costs and reduced construction activity, while real income growth and a more relaxed monetary policy have recently improved affordability.

Vienna Cheaper in Apartment Prices Among Metropolises

In Vienna, the cost per square meter for new construction is 6,432 euros, which is more than a quarter above the Austrian average - yet in a city comparison, the capital remains significantly behind Luxembourg City (11,074 euros), Munich (10,800), or Paris (10,760). Linz comes in at 4,579 euros, Graz at 3,838 euros per square meter. For existing rents, the study confirms Vienna's reputation as a tenant-friendly city: While in Luxembourg, Paris, or Dublin, one must expect square meter prices of over 40 euros, in Vienna, an average of 10.80 euros per square meter is due.

"The reasons for the low average prices for existing rents in Vienna are diverse," explains Gabriele Etzl, partner and real estate expert at Deloitte Legal. "Besides social housing, it is mainly the capped rents in old buildings and the generally tenant-friendly rental law that are a special feature. In newly financed constructions and new contracts, however, prices are above this low average value. The combination of scarce apartments and increased demand for rental apartments makes the search for a rental apartment increasingly difficult. A shortage should therefore be prevented by rapid new construction activity."

Fewer building permits and declining completions meet rising demand in urban areas. This dampens transactions but supports prices in the new construction segment. Across Europe, Deloitte recorded slowed construction activity in 2024.

KIM Regulation Slowed Down Lending

The KIM regulation, valid until June 30, 2025 (including 20 percent equity, 40 percent debt service limit, max. 35-year term), noticeably slowed down lending. With the prospect of falling key interest rates, the mood brightened at the end of 2024 and the beginning of 2025. Prices stabilized in the existing segment, while new construction prices remained mostly stable.

"Residential real estate remains a sought-after asset class," according to Deloitte: In cities and metropolitan areas, demand remains high, and the decline in new constructions could lead to further shortages and rising prices in the new construction segment in the medium term.

(APA/Red)

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