The Collapse of the Vienna Real Estate Market. Is It Time to Sell Apartments and Houses?

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• December 27, 2024
• Posted by: zoran

The Viennese real estate market is currently undergoing a dramatic transformation, bringing both challenges and opportunities for sellers and buyers alike. In an exclusive conversation with Mr. Dipl.-Ök. Zoran Kalabić, MBA, the founder of the agency 4M Immobilien, which has been operating successfully for over 20 years, we gain deeper insights into the current situation.

"If you want to know when the right time to buy an apartment is, how to purchase an apartment at a favorable price, or when selling real estate is the most profitable decision, then you have come to exactly the right place," said Mr. Kalabić at the start of the conversation.

The era of unchecked price growth is over. The market is recording an unprecedented decline of up to 20% in the residential real estate sector. During the summer months of 2024, approximately 16,000 apartments were listed for sale simultaneously in Vienna – an increase of 60% compared to previous years. This development is characteristic of a classic buyer's market, in which buyers have a record number of properties available to them and often have room for negotiation.

The causes of this market shock are multifaceted. A central factor is the high key interest rate of the European Central Bank, which, together with tightened bank lending requirements, makes it difficult for many potential buyers to finance a property. In addition, mortgage payments are often higher than rental income, causing investor-owned apartments to become an increasing financial burden. Many former investors are now seeking to divest themselves of their purchased apartments, further increasing supply and putting prices under pressure.

Another decisive aspect is the regulatory challenges weighing on the market. As of this year, new regulations have come into effect that effectively constitute a ban on short-term rentals via platforms such as 'Airbnb'. This has placed additional pressure on the market. The new-build sector is also showing a dramatic decline: this year, almost half as many building permits were issued in Vienna as in the record year of 2019. Weak demand and rising construction costs are forcing many investors to adopt a wait-and-see approach or even file for insolvency.

The rental market situation has also changed: there are currently half as many rental apartments available in Vienna as there were three to four years ago, while rental prices have risen significantly. Nevertheless, even these increased rental prices often fail to cover mortgage costs, further worsening the situation for many property owners.

What is your view on the relaxation of the KIM Regulation from July 2025? A glimmer of hope could be the planned relaxation of the KIM Regulation from July 2025, which aims to improve access to property financing for private individuals. However, there are concerns regarding the actual impact of these measures. Austria is in an economic recession, which is negatively affecting consumer spending behavior. Rising living costs and an uncertain labor market situation are placing a burden on many households, meaning that demand for real estate is unlikely to increase even with more lenient lending guidelines.

Zoran Kalabić emphasizes: "Now is the ideal time to sell real estate in order to still generate a profit." His agency, 4M Immobilien, offers free and fair valuations of apartments, houses, plots of land, and residential investment properties in Vienna and the surrounding area, with a team of over 50 employees.