A shift in Austria’s housing market is expected as home loan regulations ease and borrowing costs decline. Here’s what property buyers need to know.
Are you thinking about buying property in Austria? Now could be the time to start preparing. With falling interest rates and relaxed lending rules on the horizon, real estate experts suggest that buyer conditions could soon improve – but acting early could be key.
According to a Die Presse report, Austria’s strict KIM regulation is set to expire in July, making it easier to qualify for home loans. At the same time, interest rates in the eurozone have been declining since last year, a trend that could make borrowing cheaper in the months ahead.
Matthias Ortner, a property expert at Advicum Consulting, told the daily newspaper that potential buyers should start assessing their finances now. This includes determining how much equity they have, how much they would need to borrow, and comparing loan conditions from different banks.
Because when the market shifts, it could move fast. “A window of opportunity is currently opening up for potential home buyers”, he said.
New construction has slowed significantly in recent years, leading to a housing supply shortage.
Ortner told Die Presse that while a surge in private demand is expected as early as this summer,institutional investors—who buy properties in bulk—are also likely to re-enter the market soon
Matthias Ortner, a property expert at Advicum Consulting, told the daily newspaper that potential buyers should start assessing their finances now. This includes determining how much equity they have, how much they would need to borrow, and comparing loan conditions from different banks.
Because when the market shifts, it could move fast. “A window of opportunity is currently opening up for potential home buyers”, he said.
New construction has slowed significantly in recent years, leading to a housing supply shortage. Ortner told Die Presse that while a surge in private demand is expected as early as this summer, institutional investors—who buy properties in bulk—are also likely to re-enter the market soon after.
Ortner said he does not expect a real estate boom, but he believes the market will become more active. Banks will still require buyers to have a certain level of equity, and property valuations may not always align with what banks are willing to finance.
For this reason, he recommends fixed interest rates – at least for the first ten years – to avoid the risks associated with fluctuating rates.
For those working with a smaller budget, Ortner suggests looking at properties that may be less attractive to other buyers.
Flats without open space, such as a balcony, terrace, or garden, tend to be significantly cheaper.
Properties without good public transport connections, especially those far from underground stations, are often more affordable. Air conditioning is also becoming a key factor in pricing. Newbuild apartments that lack air conditioning – or do not allow easy installation – may see lower prices.
In some newer condominium agreements, individual owners can install air conditioning without needing approval from all other owners. Where this is not possible, properties may become harder to sell, potentially making them more affordable.
Another factor that could increase the housing supply is the parcelling of large apartment blocks.
Dividing large apartment buildings into individual units could further increase the housing supply.
According to Ortner, some institutional investors who purchased entire apartment buildings in recent years have faced financial difficulties due to rising interest rates.
“Banks would accommodate them by not forcing an emergency sale but instead setting a deadline by which the flats must be divided and sold off individually.”, he added. This means that, before new construction picks up again, more apartments could become available through this process.
The commercial property sector is seeing mixed trends. Logistics space and data centres remain in demand, while the office market has proven more resilient than initially feared during the pandemic.
Although remote work has impacted office leasing somewhat, businesses in less central locations currently have more negotiating power when securing rental agreements.
Retail spaces, however, continue to struggle. With the exception of prime shopping streets, landlords find it increasingly difficult to attract tenants. Some are experimenting with turnover based rent models to make leases more appealing.
A surprising turnaround has occurred in the hotel sector, Die Presse said. During the pandemic, there were concerns that fewer business trips would lead to a long-term decline in demand.
While corporate travel has indeed decreased, this has been offset by a rise in private leisure trips,helping the hospitality industry recover more quickly than expected.
With easier credit and falling interest rates, Austria’s property market is becoming more buyerfriendly. However, competition could heat up with limited new supply once institutional investors return.
For those looking to buy, experts advise acting early, comparing loan options, and considering less conventional properties to find the best deals.
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By Proptechbuzz
By Ravi Kumar
