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After many years of rising prices, buying a home in the domestic real estate market has become slightly cheaper again in 2023. Overall, property prices fell by an average of 2.6% compared to the previous year, with the price decline occurring mainly in existing apartments and detached houses (minus 3.7%). However, as Statistics Austria announced on Tuesday, prices for new apartments and detached houses remained virtually unchanged (minus 0.1%).
The price decline followed a rate adjustment by the European Central Bank (ECB), which is set to rapidly raise rates from 2022 to combat high inflation. In 2022, prices for existing houses and apartments rose by an average of 11.6% throughout the year, while prices for new buildings rose by 11.5%. “With the interest rate adjustment by the ECB, this situation has come to an abrupt end,” Tobias Thomas, head of Statistics Austria, said at a press conference on Tuesday.
The fact that prices for new houses and apartments remained fairly stable in 2023 is due to a sharp drop in residential construction activity. “Compared to Europe, Austria had the second largest drop in net area approved for construction in 2023, down 28%, right after Sweden, which fell by a third, and Germany, which fell by more than a quarter,” says Thomas. The EU average for approved construction fell by 14.5%.
Regionally, buying living space in Austria tends to become more expensive the further west you go. The average price of an apartment in Bregenz (€5,150 per square meter) is significantly higher than in Graz (€3,209), and the price of a house in Innsbruck (€5,754) is also significantly higher than in Bruck an der Leitha (€2,989). Prices are also significantly higher in urban centers such as Vienna or Salzburg. The median price per square meter for an apartment in Austria last year was €4,023, while the median price for a house was €2,678.
While the average purchase price fell slightly, rents rose significantly in 2023. On average, rental costs, including operating costs, increased by 7.6% over the previous year to €625.3, or €9.4 per square meter per month. According to statistics, this increase is roughly equivalent to the 7.8% increase in inflation for the whole year of 2023.
The housing situation in Austria is heavily influenced by rents; almost half of the population lives in rented accommodation. Regina Fuchs, head of the Population Bureau at Statistics Austria, said that compared with the EU, Austria ranks second, behind Germany. However, more than half of the primary rents come from social housing, which has led to a decline in average rents. In 2023, the rent (including operating costs) for municipal apartments will be 7.7 euros per square meter per month, for cooperative apartments 8.1 euros, while the average rent for other primary rentals will be 11.1 euros.
For Statistics Austria, total housing costs include more than just rent and operating costs. There are also energy costs, maintenance costs, possible loan payments and, in the case of property, additional charges for water, sewage and waste disposal. If all is taken into account, costs will be one third (34%) higher in 2023 than ten years ago (2013). The biggest cost increases were seen in municipal housing (49%) and cooperative housing (40%), while house and apartment ownership costs are only 26% higher than in 2013.
However, the share of household income spent on housing has changed little. For municipal housing, the median rose from 22% in 2013 to 25%; for cooperative housing, the share rose from 24% to 25%. However, for homeownership, the share fell from 12% to 11%. Overall, there was no change; housing costs as a share of property costs were 17% in both 2013 and 2023.
According to Statistics Austria, Austrians spend 73% of their time at home. According to Quarter, as people age, the proportion of time they spend at home increases; especially those over 61, who spend more than three quarters of their day within the four walls of their home, while those under 60 spend less than three hours.
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