All sources have been thoroughly verified for credibility. Furthermore, an industry specialist has reviewed and approved the final article.
Everything you need to know is included in our Austria Property Pack
Are you considering buying property in the heart of Europe? Are you thinking about when to take action?
When it comes to market timing, everyone has their own opinion Your Austrian friend living in Vienna might advise you that now is the worst time to buy property, whereas your real estate agent may have a different opinion and recommend taking advantage of the current market.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Austria, we base our work on facts and data we can trust, not opinions or rumors.
We have carefully studied official reports and statistics from government websites, and we now have a trustworthy database with important information. Here's what we discovered, which can help you decide if it's a good idea to purchase real estate in Austria.
Let's delve in!
How is the property market in Austria now?
Austria is, today, an exceptionally stable country
Positive
Stability is the first indicator to look at because it attracts sustainable development and investor confidence, making it a primary consideration for real estate investments. It is an information you need as a foreigner buying a property in Austria.
You probably already know that Austria is an extremely stable country. The last Fragile State Index reported for this country is 25.4, which one of the highest scores in the world.
Austria has a long history of strong democratic institutions and a commitment to the rule of law, which has enabled the country to remain politically and economically stable in the face of changing global dynamics. Additionally, the country's strong social safety net and liberal economic policies have given its citizens a high quality of life, contributing to the overall stability of the country.
All good for the stability. Now, let's redirect our attention to the economic forecast.
Austria will keep growing steadily
Positive
Before buying a property, consider the state of the country's economy.
Based on the IMF's outlook, Austria will end 2023 with a growth rate of 0.4%, which is quite flat. For 2024, the experts say 1.1%.
However, this low number is just for the short-term, as Austria's economy is expected to increase by 6.1% during the next 5 years, resulting in an average GDP growth rate of 1.2%.
A moderate growth rate in Austria is beneficial for property investment as it implies that the market is stable and prices are unlikely to fluctuate dramatically. Additionally, it provides investors with a steady, predictable return on their investment.
However, there are other indicators to watch.
Austrian business owners have become pessimistic about the economy
Negative
The GDP growth provides insights into the property market in Austria, but may not fully reflect business community sentiments. Fortunately, in Austria there is an official metric that is frequently updated. It's not the case for every country, so we're lucky.
The calculation of the Business Consumer Index (BCI) involves surveys and assessments of business leaders, reflecting their confidence in the present and future economic conditions.
The latest figure for the Business Confidence Index, reported by The Global Economy, is -7 for Austria. To help you with interpretation, a pessimistic outlook is typically associated with a negative BCI score.
Things were different 12 months ago. Business owners were actually rather optimistic and the BCI was at 8.
A lack of confidence among local businesses in Austria can lead to a sluggish property market, with reduced investment and slower property price growth. Buyers might face limited options in terms of available properties and potentially encounter challenges in finding motivated sellers or suitable financing options.
Make a profitable investment in Austria
Better information leads to better decisions. Save time and money. Download our guide.
Austria is providing less building permits
Neutral
If you're thinking about buying property in a country, it's a good idea to think about how many permits have been granted for building. An increase in the number of building permits issued signifies a strong belief in the property market, serving as a promising indicator of its positive growth.
Unfortunately, the number of building permits granted is falling in Austria.
Throughout the previous 12 months, according to Statistics Austria, the number of building permits granted by Austrian local institutions fell by 1.2%, from 77,891 to 76,967 units.
Clearly, this is a negative sign. Let's explore further data.
One last point to consider - a decline in building permits directly affects the availability of properties. In such a situation, it is probable that housing prices will see an increase in Austria in 2024.
Austria's property prices continue to experience accelerated growth
Positive
Austria's home prices have increased by 49.2% in 5 years according to eurostat.
It means that if you had bought a chalet in the Austrian Alps for $1,000,000 five years ago, then it would now be worth around $1,492,000.
These days, property prices are witnessing a continuous acceleration in growth, demonstrating a robust upward trend in the real estate market.
Then, it seems like that investing in the Austrian property market is currently a good opportunity. However, it might be wise to wait for a market correction to get better prices.
You can find a more detailed analysis of the real estate prices in our property pack for Austria.
Everything you need to know is included in our Austria Property Pack
Austria's population is getting (a bit) richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Austria, the average GDP per capita has changed by 1.9% over the last 5 years. Though not substantial, there is still a positive trend of growth.
This means that, if you purchase a charming flat in Vienna and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is expected to increase in Austrian cities like Vienna, Salzburg, or Innsbruck in 2024.
You'll get weak rental yields in Austria
Neutral
Rental yield is a popular metric for understanding the profitability of real estate investments.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Austria is purchased for €350,000 and generates €18,000 in annual rental income, the rental yield would be 5.14%.
According to Numbeo, rental properties in Austria offer gross rental yields ranging from 1.3% and 4.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Austria.
It means that your ability to generate substantial returns from a property investment may be limited.
As previously observed, the supply of real estate will remain constant, indicating that property prices are unlikely to change. However, there might be a slight growth in the number of affluent tenants. Consequently, rental yields might increase in Austria in 2024.
Everything you need to know is included in our Austria Property Pack
In Austria, inflation is anticipated to be moderate
Neutral
In two words, inflation is when costs climb.
It's when your go-to slice of Sachertorte in Vienna costs 5.50 euros instead of 5 euros a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, increasing the property's cash flow.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, helping preserve the investment's value.
- Diversifying into real estate provides stability during periods of inflation.
Based on the IMF's outlook, over the next 5 years, Austria will have an inflation rate of 13.7%, which gives us an average yearly increase of 2.7%.
This data is suggesting that Austria could experience a moderate rate of inflation in the future. Then, prices would rise. It might become more expensive to buy in the future. However, if you buy now, your investment might appreciate and you can sell for a higher value later.
Is it a good time to buy real estate in Austria then?
Time to conclude !
2024 presents a favorable window for property investment in Austria due to a range of encouraging indicators that outweigh potential drawbacks. Austria's remarkable stability, coupled with its consistent growth trajectory, sets the stage for a secure investment environment. The continued accelerated growth of property prices adds to the appeal, suggesting potential appreciation in real estate value over time.
Furthermore, the country's growing population and increasing prosperity contribute to a growing demand for housing, potentially leading to higher property values. Although some neutral aspects, such as the decrease in building permits and weak rental yields, should be noted, Austria's stable economic environment counters these factors.
The anticipation of moderate inflation aligns with the stable investment landscape, providing a level of predictability for potential property buyers. It's essential to acknowledge the negative sentiment among Austrian business owners regarding the economy. However, the resilience displayed by Austria's stable economic indicators could mitigate the impact of this sentiment on the property market.
In summary, the combination of Austria's stability, steady growth, property value appreciation, and moderate inflation makes 2024 an attractive year for property investment. Despite some neutral and negative signals, the overall economic environment and potential for property value growth make Austria a compelling option for investors considering real estate purchases.
We genuinely hope this article has provided you with valuable insights and information.. If you need to know more, you can check our our pack of documents related to the real estate market in Austria.
-Is it a good time to buy a property in Switzerland?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Buying real estate in Austria can be risky
An increasing number of foreign investors are showing interest in Austria. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.