The 2023 Engel & Völkers Market Report for Residential Property in Austria reveals that, despite a decline in the number of sale transactions in recent months, prices on Austria’s residential property market have remained largely stable. Prices for freehold apartments rose overall by 8.9 percent in 2022, while prices for detached and semi-detached properties increased by 1.7 percent. These price rises fluctuate significantly more depending on specific locations compared to previous years. The price slump on the real estate market, anticipated by some, failed to materialise. The development of prices in the first half-year of 2023 also seems stable, with only occasional price corrections forecast.
Since the autumn of 2022, the residential real estate market has witnessed a tangible decline in transaction volume. In the first half-year of 2023, there was a 25 percent decrease in the apartment segment compared to the previous year, while the segment for detached and semi-detached properties saw a 21 percent drop. That said, the average price per square metre for freehold apartments during this period only decreased slightly, to 4,500 euros, while for detached and semi-detached properties it remained stable at a national average of 3,900 euros. It can be presumed that prices will continue to remain stable over the coming months, especially in good and very good locations.
“The current situation offers real opportunities for buyers to acquire their dream property at a good price. That is thanks to a greater availability of real estate listings – something which had been in lower supply over the past few years. In the years to come, a decline in the number of new real estate projects being completed is forecast, due to the high construction costs, which will in turn tend to drive property prices up in the medium to long term,” says Sylvia Verdorfer, Area Manager for Austria at Engel & Völkers.
Once again ranked as the city offering the highest quality of life, Vienna continues to see strong population growth. The property market witnessed a slight cooling in 2022, but in the second half of 2022 prices per square metre rose again to over 6,600 EUR, especially in prime locations close to the centre of the city. In the outer districts, on the other hand, prices dropped – in simple locations. Both the level of demand and prices remain strong in the luxury segment.
“The macroeconomic climate and the quality of the specific real estate locations are becoming increasingly crucial factors when it comes to long-term property valuations. An outlook for the second half of 2023 reveals that the Viennese market will experience a strong demand for residential property due to the continuing influx of people, both domestically and from abroad. Despite a drop in transaction numbers, prices per square metre are slightly higher than the previous year, especially in the city centre,” says Roland Schatz, Head of Sales at Engel & Völkers Vienna.
Lower Austria benefits from its proximity to Vienna, with an overall stability in evidence on the market, despite the current situation regarding interest rates. The price structure of Lower Austria’s real estate market shows clear differences between the regions immediately surrounding Vienna, including Mödling, Baden and Klosterneuburg, and the more rural regions in the west. The average sale price of freehold apartments in Mödling rose slightly in 2023 from 4,250 to 4,400 euros/m², while in Klosterneuburg the 2023 price trend saw a slight drop from 4,800 to 4,700 euros/m².
“While there has been stagnation in prices per square metre and isolated price corrections in many districts since mid-2022, prices in 2023 in Vienna’s greater metropolitan area remain stable and have even risen in some cases. Properties with good transport links to the capital continue to enjoy high demand. Prices are expected to continue to rise in the case of freehold apartments in prime locations, such as in Baden, currently priced at 7,140 euros/m²,” says Oskar Beirer, Managing Director of Engel & Völkers Lower Austria. Furthermore, there is a noticeably growing focus on the quality standard and energy efficiency of existing properties, which will become increasingly important when making purchasing decisions in the future.
In the Austrian province of Styria, property prices remain moderate; only in the Burgenland region are average prices even lower. When compared internationally, Graz is the cheapest city in Europe when measured in relation to income. “Contrary to forecasts, the sale prices for apartments did not fall in 2022. They remained very stable in fact, and even rose slightly in some cases. The average price per square metre for freehold apartments in southern Styria in 2022 was just under 2,900 euros, and for detached and semi-detached houses the average price was 250,000 euros,” says Harald Martich, Managing Director of Engel & Völkers Styria.
This trend has been ongoing since the beginning of 2023, with prices flat-lining at a moderate level. “With prices per square metre for newly built freehold apartments averaging 5,000 to 7,500 euros in very good locations, the real estate market in Graz is still reasonably priced compared to other major cities,” Martich continues.
Strong demand in prime locations is set to continue, while price corrections are only to be expected in simple locations. Demand for exclusive second homes and holiday properties in southern Styria and in the Alpine region remains high. Prices of 800,000 to 1.4 million euros can be expected for detached and semi-detached houses in very good locations in the southern Styria region.
In contrast to other regions, the real estate market in the Austrian state of Carinthia recorded significant price rises in 2022. There was a particularly sharp price rise to an average of 4,500 euros/m² in the segment for freehold apartments. A slight decline in demand and a longer time-to-market are only noticeable in the mid-price segment due to more difficult financing conditions. “The demand for premium properties in top locations with a lake view, lakeside location or mountain panorama remains as strong as ever. One development that stands out is the growing trend towards discreet and silent marketing among owners looking to sell exclusive properties,” reports Hansjörg Lenz, Managing Director of Engel & Völkers Carinthia.
The future development of prices on the real estate market in Austria’s southernmost province is strongly dependent on the specific location of a property. The demand for the very best lake regions and high-quality Alpine chalets continues to rise. In the highly prized region of Upper Carinthia and Lake Millstatt, prices per square metre for freehold apartments in very good locations are expected to range between 6,500 and 9,000 euros in 2023. “Prices in the Lake Wörth/Lake Osiachersee region are expected to range between 6,500 and 18,000 euros/m² for freehold apartments in prime locations. This means the shoreline of Lake Wörth will continue to rank among the highest priced real estate in the whole of Austria. Thanks to the prices still being moderate and the listings attractive, the Lower Gail Valley, Rosental Valley and districts of St. Veit and Feldkirchen are also seeing very positive growth. The market forecast also suggests that supply will exceed demand in the next one to two years due to low rates of project completions. This will result, in turn, in buyers’ focus turning increasingly to ‘upcycled’ existing properties,” Mr. Lenz adds.
Salzburg’s real estate market continues to enjoy a high level of demand and still offers potential for future growth, due to its appealing location, panoramic views and proximity to lakes. Sales in the segment for detached and semi-detached houses fell slightly in 2022 due to the development of interest rates. This factor is having a negligible impact in top locations however. The average price of freehold apartments has been 5,800 euros/m² since the middle of last year, but prices for freehold apartments rose slightly from 6,433 euros/m² in Q2 2022 to 6,600 euros/m² in Q2 2023. In the segment for detached and semi-detached houses, there has been a slight decline in prices from 1,562,000 euros in Q2 2022 to 1,300,000 euros.
An outlook for the second half of 2023 and initial trends for 2024 continue to indicate stable to positive market development in good and very good locations. In simple locations, further price corrections are possible in the short term. “Changes to the market in the past have left their mark on Salzburg. Despite this, there are increasing opportunities to acquire highly attractive properties, which opens up the possibility of accumulating wealth across generations,” reveals Mark Hüsges, Managing Director of Engel & Völkers Salzburg. In the coming months, rising sale prices for detached and semi-detached houses in very good locations of between 2 and 17 million euros are expected, along with stable prices of 800,000 to 2.4 million euros in average locations.
The development of new premium projects in the Salzkammergut region is resulting in the emergence of new attractive residential locations that are set apart by their exclusivity, with direct lakefront access, adjacent bathing areas and sprawling open spaces. In the lakeside location segment, detached and semi-detached houses commanded top prices of over 10 million euros, while the average price for freehold apartments in 2022 was just under 5,000 euros/m². For 2023, a price range between 1.5 and 9.5 million euros is forecast for detached and semi-detached houses in very good locations, while prices in average locations are expected to remain stable at between 850,000 and 2.5 million euros.
Greater supply than demand has led to a cooling off period on the Tyrolean real estate market and, at the same time, given buyers more leeway in negotiations. Despite rising interest rates, prices per square metre have continued to increase overall. In 2022, the average sale price for freehold apartments exceeded 6,000 euros/m² for the first time, while prices in the segment for detached and semi-detached houses averaged 933,000 euros.
In the first half-year of 2023, there are signs of a short-term bottoming out of the market due to the current interest rate situation, compounded by lower demand and a decline in new construction activities, which will temporarily result in a severe shortage. Looking ahead to the second half of the year though, there is the prospect of an increase in transaction figures again with a still stable market, high stability in valuations in prime locations and only minor price corrections. “Properties in premium locations remain sought-after and offer both a high quality of life and stable prices. The higher number of real estate listings at present makes this a favourable time for buyers, as properties have come onto the market that were not available in recent years,” says Florian Hofer, Managing Director of Engel & Völkers Tyrol and Zell am See.
Prices in Tyrol range across a diverse spectrum, whereby Kitzbühel remains the top region in the province in 2023 with prices per square metre for freehold apartments ranging from 7,000 to 28,000 euros and prices for detached and semi-detached houses ranging from 1.5 to 28 million euros.
“Properties in premium locations serve as a crisis-proof investment and for many high net worth individuals they are a key method of protecting assets against inflation,” Mr. Hofer adds.
The link to the Market Report (German PDF) can be found here.