New Construction Crisis Causes Prices in the Domestic Real Estate Market to Rise
In the first half of 2025, approximately 37,000 real estate transactions were registered in Austria, representing a decrease of about 5 percent compared to the previous year. After a strong first quarter, the number of transactions decreased in the second quarter, particularly in Styria and Carinthia. High interest rates and the KIM regulation hampered the market. Despite declining activities, prices remained stable. Existing apartments increased by 3.8 percent, new apartments by 1.1 percent, and residential buildings by 3.5 percent. Demand remains high, while supply is scarce.
Vienna a Safe Haven in the Domestic Real Estate Market
Although declines are observed in most areas, Vienna is experiencing an opposite upswing. The capital reports an increase in transactions by 17 percent and attracts both investors and homeowners with substantial equity. For new apartments, prices average 6,913 euros per square meter. Institutional investors view Vienna as a safe haven, also because the rental market is becoming tighter and higher rents are forecasted.
New Construction Crisis Exacerbates Shortage in the Domestic Real Estate Market
A key aspect of the current situation is the drastic decline in new housing construction. According to the WKO, the number of completed construction projects has decreased by about 30 percent. This leads to further rising prices in the long term: High costs for land and construction work make it difficult to create affordable housing.
Regional Gap in the Domestic Real Estate Market Widens Further
The most significant declines in transactions were observed in Styria (-15 percent), Carinthia (-12 percent), and Upper Austria (-9 percent). In these areas, the homeownership market predominates, and credit financing plays a particularly important role here. In contrast, a different development is seen in the west: Vorarlberg (+5 percent) and Salzburg (+/- 0 percent) have the highest prices and remain stable. Demand in these regions remains strong.
Real Estate Market: Commercial Properties with Light and Shadow
In the area of commercial real estate, a mixed development is evident: While industrial and commercial spaces show significant growth rates, such as in Salzburg (+21 percent per year over five years) or in Upper Austria (+15 percent), office and retail spaces face stagnant or slightly declining prices. In Vienna, the price per square meter for office space is about 4,400 euros, with a slight downward trend. Causes for this include the trend towards home office and increasing ESG requirements.
Rental Market Under Pressure in the Domestic Real Estate Market
The crisis in the real estate market is increasingly affecting the rental market. Many people who cannot obtain a loan are forced to continue renting, while the supply decreases. Nevertheless, net rents in most regions did not rise as sharply as inflation – an exception is Vienna with an increase of 5.5 percent.
A Real Estate Market of Contrasts
In 2025, the real estate market in Austria is divided: In Vienna, prices remain stable and high, while in the federal states, financing restrictions are burdensome. However, a drastic price drop is not expected, as the shortage of affordable housing is significant. Only with relaxed credit conditions, a revival of housing construction and renovation subsidies, or a revival of new construction could the market gain momentum. Until then, Austria remains an expensive place for living, and acquiring property is difficult for many.
(Red)
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