First Clouds Are Gathering on the Real Estate Market

First there was a health crisis with Corona, then an energy crisis followed with the Ukraine war. All of this is having an impact on the real estate market: "The state of exception is the new normal," Matthias Reith from Raiffeisen Research summarized the situation on the residential real estate market at a press briefing recently.

In times of crisis, prices on the residential real estate market have always risen even more sharply in the past during the financial crisis, the euro crisis, Brexit, Corona, etc. Whether inflation and the now steadily rising interest rates will have the same effect remains to be seen.

Austria-wide, prices are still continuing to rise. They increased by 3.7 percent in the first quarter of this year. This is attributed to many purchases being brought forward. Because not only are interest rates rising, but lending is also becoming more difficult from August onwards. Overall, experts are still expecting a rise in real estate prices for the full year of at least eight percent.

Nevertheless, the year will be split in two: from the second half of the year there will be a "slower pace," also because affordability is becoming a limiting factor in light of rising interest rates.

According to experts, how inflation affects the real estate market depends on the level of inflation. In the past, residential properties have been "winners from inflation." Whether the rise in interest rates will have a dampening effect on prices also remains to be seen: "A significant rise in interest rates would certainly be an event that could bring the domestic real estate cycle to an end and trigger a price correction," say experts from the real estate industry. They add: "However, an excessive rise in interest rates seems unlikely to us."

The 4M real estate team is happy to advise and support you in all matters and guarantees you legal certainty and a successful process through our professional, competent lawyers and financing partners.

Whether apartment, house, rental property or plot of land in Vienna and the Vienna area, for further questions you are welcome to contact me at any time at:

Robert Schmid [email protected] +43 676 541 1767