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Housing markets in Austria have been developing smoothly for two decades. After a peak in the early 1990s, the rents have stagnated in Vienna and all provincial capitals until the mid 2000s. Only since then prices increase at least close to the Consumer Price Index (CPI), but hardly above (see figure below). Hence, the Austrian housing market develops differently to most other European countries, where the economic crisis led to a downturn of market prices.
In the average of 10 years, private market rents increased for not more than 1.7% p.a. all over Austria in nominal terms. Inflation was in the same period 1.95%. Some provincial capitals, particularly Salzburg and Innsbruck, had higher average increases of 3-4% in average. Vienna has caught up only recently with an increase of 5.3% in 2009. The 10 year average is still as low as 1.9%.
The low dynamic of the private housing market indicates the influence of the strong LPHA sector. As customers are able to choose from different market sectors, i.e. private rents, detached houses and the LPHA sector, the latter is able to influence prices on the other sectors.
Figure: Private rental housing market development in Austria, nominal
Re. Net rent (without maintenance costs, VAT, energy etc.) CPI 2000 = Consumer Price Index, 2000 = 100 Source: WKO Immobilienpreisspiegel, Statistik Austria, IIBW |
