Latest house price news in Austria: prices continue an upward trend

Housing sales and prices

Vienna is continuously positioned among the top rankings most livable cities of the world, and over 60% of the city’s residents live in subsidized housing. However, the private housing market continues to experience increases in rents and construction prices.

Vienna has been growing at a rate of 20,000 inhabitants annually for several years now and will soon have a population of over 2 million. Official statistics point to a yearly need for 10,000 new or refurbished houses, up from 6,000-7,000 homes needed until recently.

Economic growth and the influx of people are pushing housing prices up, with figures for the whole country showing an average year-on- year rise of 4.57% in 2016 and 4.7% in 2017. In Vienna the increase was only 0.32% in 2017, with the rest of the country averaging a 7.39% increase. This trend continued in 2018.

New dwellings prices had the biggest increase by Q3 2017, with existing dwellings and flats increasing less. Supply and demand continue to grow and by the end of 2017 there were plans approved for 20,600 new apartments. In December 2017, outstanding housing loans increased by 3.1% according to the European Central Bank (ECB) to € 104.29 billion.

High-end buyers prefer the area to the western side of Vienna, where the median sale price for a villa in 2017 was just above € 2 million. Estate agent reports show that 2017 was a record year for the luxury property market.

Many older family owned villas are being put on the market and buyers are converting them into luxurious apartments for resale.

Contributing factors

The stable economy of the country is driving the property market. Vienna has low unemployment levels and a growing population. The economic crisis of 2008 pushed investors to look for safe havens and since interest rates are very low, investments in property are highly sought after.

Buyers are looking beyond traditional neighborhoods and seek affordable homes, within close proximity of public transport.

Foreign buyers from Germany, Switzerland, Russia and other Eastern European countries were traditionally those who sought to buy a second home or to invest in Vienna. Until recently they accounted for about 10% of home sales in the luxury market. Foreign sales in Vienna now account for more than 20% of the market and the buyers are coming from further afield.

Rental yields

Rental prices of subsidized apartments keep in line with the price of inflation; but statistics drawn from a report by Austria’s Chamber of Labor show that rents on the free market have increased by up to 43% in the years between 2008 and 2016. These increases are mostly due to property investments in the housing market.

The rising prices of properties are lowering the gross rental yields, but that also depends on where the property is situated. Yields are generally higher in less expensive areas.

Innere Stadt, Vienna’s most luxurious and least populated area has the lowest yields, and apartments sell for € 11,000 to €13,000 per m2. Yields in Innere Stadt range from 1.75 to 2.3% and most buyers are buying for personal use.

The districts with more acceptable yields sell at anything between € 3,500 and € 5,400 per m2, with yields ranging between 3.4 % – 4% for larger apartments and even reaching 5% for smaller ones. These areas include Margereten, Mariahilfen, Favoritn, Hernals and Leopoldstadt.

Other than district, size can also play a role in returns. Owning many smaller apartments might prove to be less profitable and more time consuming than owning one larger apartment.

The city of Salzburg has selling prices that are in the region of € 5,500 – 6,300 per m2 and rent prices approach those of Vienna. Rents are between € 12-17 per m2, with a gross rental yield ranging from 2.4% -3.8%.

Graz has affordable apartments that cost €3,300 to 4,400 per m2 and rent for anything between € 10 to 13, 50 per m2. Rental yields are the best here and range from 2.5 to 4.9%. Smaller apartments generally have higher yields in these two smaller cities.

Austria has pro-tenant laws and there is rental control, with tenants having the right to appeal rent paid if they feel it was excessive, even after vacating the apartment.

There are two tenancy laws- General Civil Code and MitrechtsG –and they are amended frequently.

Purchasing costs

Even though deductions are available, property owners, especially those with larger properties, are heavily taxed. These rates are progressive and non- residents have certain penalties.

Non -EU buyers have to get a special permit to buy. This can be a slow process of up to six months and many resort to using a company to purchase, thereby speeding up the process.

For Austrian citizens, their worldwide income is taxed progressively.

Capital gains taxes only affect properties purchased after 31 March 2002 and are calculated at a flat rate of 27.5%.

Inheritance tax was abolished in August 2008, and was replaced with a gift tax.

Buying costs are high and range from 9.4% to 13% of the property value. This includes 3.5% tax, a registration fee of 1.1%, agent fee of 3%, 20% VAT on the agent fee, lawyer and notary fees. The buying procedure takes about 32 days to complete.

The owner is liable for annual local taxes and fees on the house.


The IMF has projected Austria’s growth for2019 at 2.8%, in continuance with the two previous good years. This is after a five year period of stagnation, which began in 2012 and continued until 2016.

The Austrian economy is driven by exports; with more than 75% of its products going to the rest of Europe and 30% of those to its biggest trading partner, Germany.

With unemployment figures falling, and currently at 4.8%, Austria is well below the European average of 6.9% for 2018 and it has managed to decrease its budget deficit to less than -0.3 % of GDP. These figures are provided by the European Commission.

Austria is one of the European countries that get the highest number of asylum applications. Even though Austria accepted 43,200 applications in 2015, they reported that it started affecting their unemployment rates and an increase in crimes. The following year they reduced the numbers accepted and then decided to deport 50,000 asylum seekers over the next few years. These restrictions have been continued by the new Chancellor Kurz and the country will no longer be providing private housing to asylum seekers, but will accommodate them in centralized facilities.