Home Ownership Remains Hard to Afford

"The decline in real estate prices, high income increases, and the easing of monetary policy have made the acquisition of home ownership in Austria more affordable again over the past two and a half years," says Bank Austria's chief economist Stefan Bruckbauer. "Compared to 2008, the beginning of the real estate boom, real estate prices have nevertheless risen significantly more than incomes," Bruckbauer continues. The dream of owning a home remains difficult to achieve for many households in this country.

Home Ownership More Affordable Again

The rise in interest rates for housing finance and the introduction of stricter credit rules three years ago triggered a "moderate" decline in real estate prices in Austria, according to the analysis. Prices stabilized again in 2025, says Bank Austria economist Walter Pudschedl. "Housing is indeed more affordable again, but still difficult to afford," the study concludes. For comparison: In the first half of 2025, a household had to spend nearly 12 annual incomes for a 100 square meter condominium, and almost 8 annual incomes for a 100 square meter house. In 2022, it was 15.5 and 10.5 annual salaries, respectively. However, in 2008, it was only 8.5 and 6 annual incomes.

Trend Reversal in Home Ownership

The correction of real estate prices, the strong increase in incomes, and the easing of monetary policy led to a trend reversal in the first half of 2025, according to the study. "The volume of new credit grants, which amounted to only 850 million euros monthly in the first half of 2024 - about a third of the first half of 2022 - increased by 54 percent year-on-year to 1.3 billion euros monthly in the first six months of 2025," explains Pudschedl. By mid-2025, the financing volume had reached 130 billion euros, whereas at the end of 2022, it was still 135 billion euros.

Rising Real Estate Prices in Coming Years

The high demand for rental properties due to the still high real estate prices is driving rents "further above average," according to the analysis. "In combination with the automatic indexing of rents, this has led to an increase in rents in Austria by 17 percent since 2022. This is above the general inflation," comments Pudschedl. He forecasts a "persistently higher dynamic of returns in renting" in the coming years. It is also expected that real estate prices will rise again in this country - "likely more strongly in used properties than in new construction." However, the economist notes that the price increase is likely to be "moderate, roughly at the level of general inflation."

(APA/Red)

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