The Hike of Real Estate Prices Is Ending
The rise of prices for real estate is slowly coming to an end. The Austrian Real Estate Association (OVI) reported in front of journalists that the prices have hit the ceiling now. However, this is not a drop in prices but just a stabilization of them. The demand for real estate has gone back in the last months.
Real Estate Prices Are about to Stabilize in Austria, According to the Austrian Real Estate Association. / Picture: © Wikimedia Commons / FreeclimbZurich / CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)
The real estate boom is over. "After a decade of constantly rising prices, a ceiling seems to have been reached," said Andreas Wollein, board member of the Austrian Real Estate Association (OVI), on Tuesday in front of journalists. The prices calm down. However, this only means lower rates of increase. "It won't get any cheaper." For this year he expects a moderate price increase of around five percent or stagnation, according to Die Presse.
However, demand has fallen noticeably in recent months, especially for properties that cost more than 500,000 euros. The inquiries had “moved more towards rent”. According to Wollein, this is mainly due to the banks. Stricter award criteria for real estate loans have been in force since August 1, 2022. The corresponding KIM or Credit Institutions Real Estate Financing Measures Ordinance "was of course a brake". Added to this are rising interest rates and energy prices, high inflation, and the uncertainty caused by the war in Ukraine. “There are fewer inquiries and longer marketing times,” the real estate expert outlined the market situation, as reported by ORF.
In any case, living space is still a solid form of investment. "We expect demand for supply to stabilize in the medium to long term," said Wollein. "As an association, we have repeatedly drawn attention to the fact that zero interest rates and the lack of other forms of investment have driven this real estate boom – all real estate agents knew that things could not go on like this," the OVI board admitted, according to Vienna.at.
According to Die Presse, Real estate prices in Vienna have "not fallen overall" since 1993. Not even after the briefly immense price hike in 1995, when there was talk of the Expo Budapest-Vienna at the Prater and prices in the second district skyrocketed, prices had dropped sustainably. Between 2003 and 2008 there was another increase, in 2008 there was a real boost. "2013 saw the great growth that we have seen for ten years now," summarized the OVI board.
The association is skeptical about "the causa prima, the broker issue of the ordering principle", which will apply in Austria from July 1, 2023. From then on, the portfolio provider pays the entire brokerage commission. "Double brokerage, which was practiced for more than 100 years, will be buried this year and thus abolished," regretted OVI President Georg Flodl. The broker "looked after both sides equidistantly", as reported by ORF
Also according to ORF, The government should not change the value retention clause in rental contracts, because the owners have high investments in the house given the decarbonization, emphasized OVI Managing Director Anton Holzapfel. Without adjusting the rents for inflation, these investments could not be financed. "We fully support the phase-out of fossil fuels," emphasized OVI developer spokesman Klaus Wolfinger. The Renewable Heat Act (EWG), which has not yet been passed, is "urgently needed because clear framework conditions are needed". The housing regulations should be “formulated as quickly as possible”.