Real estate prices continue to fall
According to analysts, there is no end in sight to the fall in prices, although the market is divided into two parts: Second-hand properties are becoming cheaper, but newly built hardly at all.
It would have been unthinkable in the past, but now one notices it all the time! A young woman Ines S, has been looking for a larger apartment for herself and her family on various real estate platforms for several years.
Recently, she has noticed time and again that apartments are not snapped up immediately as they used to be. But they remain advertised for a longer time and now the prices of individual properties are even reduced.
The impression is not misleading: the real estate market is facing quite a slump. While residential property became around 23% more expensive in 2021 and 2022, prices are currently falling again slightly. According to property price data from the Austrian National Bank, prices fell by just under 0.4% between July and September 2023.
Real estate prices continue to fall
Raiffeisen Bank analyst Matthias Reith and his colleagues are forecasting a price decline of around two percent for 2023 as a whole. This means that if you also take into account inflation, which is still quite high, the real price decline will be considerable.
Not all new builds are the same
On the other hand, the price trend is not the same in all areas. Resale properties have become significantly cheaper in nominal terms, by 6.9 percent in Vienna and 3.5 percent in the rest of Austria. Newly built houses and apartments have become even more expensive. Since last Autumn, prices increased by 2.2 percent and 4.6 percent respectively.
Older apartments are currently less sought-after because heating costs are usually higher and renovation or conversion of the heating system is often imminent.
Buyers of new-build apartments, on the other hand, have to bear the high construction costs of recent months. In addition, most of them are up to date in terms of energy efficiency, which prospective buyers are willing to pay for. This trend will continue in the future, as new-build apartments are likely to become scarcer in the coming years. Even now, far fewer projects are being granted planning permission.
Slump in transactions
The cost of building materials has now fallen again – by a good nine percent between May 2022 and September 2023. However, this has changed little in terms of overall construction costs. Labour in particular has become significantly more expensive – by over eight percent since May alone, according to Raiffeisen Research.
The number of transactions is also likely to fall further. According to Eurostat, 33 percent fewer residential properties changed hands in the first half of the year, and this trend is set to continue in the future.
According to Immo United, which regularly collects and analyzes land register data. From January to September 2023 almost 27 percent fewer transactions were recorded.
“If fewer properties are bought, sooner or later this will have an impact on property prices,” says Roland Schmid, Owner and CEO of Immo United GmbH. “The current figures from the land register, as well as the current market situation, show us that the real estate sector faces further challenging months ahead.”
Analysis of land register data
A comparison of average apartment prices in the first six months of 2022 and 2023 by Immo United shows that prices for new-build apartments have already fallen in some state capitals.
Accordingly, home buyers paid less in Klagenfurt, where the price of an average new-build apartment fell from EUR 317,000 to EUR 300,000.
The average apartment price also fell in Linz from 389,000 to 326,000 euros. In Graz, there was only a minimal increase from EUR 287,000 to EUR 288,000, while all other provincial capitals saw higher price increases in the new-build segment.
In Vienna, for example, the average apartment price rose from EUR 418,000 to EUR 430,000, and in Innsbruck from EUR 556,000 to EUR 599,000.
The price of second-hand apartments fell from EUR 350,000 to EUR 338,000 in Vienna. From EUR 348,000 to EUR 339,000 in Salzburg and from EUR 258,000 to EUR 229,000 in Linz. A minimal decline was also registered in Innsbruck, from 389,000 to 388,000 euros, as well as in Bregenz (from 338,000 to 337,000 euros).
In Klagenfurt, used apartments were more expensive in the first half of 2023 than in the first half of 2022 (EUR 216,000 and EUR 200,000 respectively), as was the case in Graz (EUR 206,000 and EUR 198,000 respectively), (Bernadette Redl, Martin Putschögl, 7.11.2023)
Source: Der Standard
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