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Real Estate in Vienna: Offer Does Not Catch up Demand

Published: March 25, 2014; 15:50 · (Vindobona)

There is a growing trend towards population increase as well as small households in Vienna.

Experts forecast a strong accelerating prices due to the gap of demand and supply. / Picture: © Vindobona.org

Living in Vienna will remain expensive. For the year 2014 an increase in rental rates by 2 to 2.5 percent is expected. The volume of condominiums is also expected to rise by 3 to 5 percent. The dramatic price increase is due to the consistent demand, which was pointed out at a real estate report presentation by real estate companies EHL and BUWOG on Tuesday.

Until 2050 increase of 26 percent in households

Not only the population in Vienna increases dramatically – also the trend to smaller households cannot be ignored. The real estate report showed that by 2050 households will augment by 26.3 percent. This is caused by the strong demand which stands, however, in contrast to no significant expansion of supply. Until 2015 the gap in the real estate supply will be exceeding the annual production. Large projects in Vienna, as for instance the Seestadt Aspern in the north or the redesign of the district with the new central station, will have a mitigating effect from 2016 onwards.

While existing rentals are protected, higher rental costs come to bear in case of new tenants. This gap is expected to widen in the future. More than one third of the proportion of rental properties can be attributable to public, non-profit condominiums, which costs are widely below the current market prices. In contrast, those who wish to move to a new apartment are confronted with three times higher costs. Michael Ehlmair, CEO of EHL real estate considers “the strong protection of existing rentals to be at the expense of new apartment seekers.”

In fact, this means that Vienna turns to a classical “sales market”. Andreas Holzer, expert at BUWOG, determines that more condominiums than ever are sold during the actual construction period. The most expensive condominiums in Vienna are currently to be found in the inner city (Innere Stadt). When moving into a new flat, the highest price is up to 16,500 Euro per square meter. On the second place is Döbling with 5,600 Euro per square meter followed by Josefstadt with 5,100 Euro and Neubau with 5,050 Euro.

Rentals in Alsergrund most expensive

Considering rentals is quite similar. On the top for new apartments are Josefstadt and Alsergrund with 12.6 Euro per square meter. Döbling and Neubau account to 12.5 Euro per square meter. For the Innere Stadt numbers are not available. The prices also reflect the current demand in the city. Still, the districts from three to nine, 13th, 18th and 19th are very popular among apartment seekers. But also different districts like Leopoldstadt and Margareten gained in popularity in the last years.

On average, the inhabitants of Vienna change their apartments every four to five years. Above all, aparments within the lower price rage re particularly in demand at the moment. This is due to the weak economy in Austria. In the long term, experts forecast strong accelerating prices due to the gap of demand and supply.