The Housing Market
New apartment construction has already declined significantly, and a further even more severe contraction is expected in 2025 and 2026. This creates new opportunities for the owners and sellers of existing apartments – particularly through rental and, in the coming months, also through sales. Weak new construc- tion and opportunities for older buildings
Karina Schunker MRICS
Managing Director EHL Wohnen GmbH
The economic downturn, rapid increase in interest rates and high construction prices have created a virtually toxic environment for the real estate sector. New
The decline in building permits also means fewer construction starts and will have an impact on completions, above all in 2026 and 2027.
which has been intensified by the general standstill in older building loft extensions.
This development may appear problematic from an overall economic perspective but is good news for property owners. Rents have increased substantially, vacancies are on the decline and the marketing periods in practically all locations are shorter than in previous years. On the investment property market with its regulated rents (Austrian Tenancy Act, “Mietrechtsgesetz”), the benefits are found primarily where location-based surcharges are possible and support pricing in line with the market – here, among others, central locations and areas with excellent infrastructure. The location-based surcharge, in part 16 Euros, across large sections of the inner city allows for attractive rents.
construction, in particular, has come under serious pressure. The number of project starts has collapsed and led to a substan- tial decline in completions. Roughly 13,390 apartments are scheduled for completion in 2024, whereby the number of especially popular, freely financed rental apartments has dropped by more than half to 2,840. That represents the lowest level in seven years.
Rents have increased substantially, vacancies are on the decline and the marketing periods in practically all locations are shorter than in previous years.
Numerous developers have already postponed or suspended planned projects for an indefinite period. The number of completed units is, as a result, expected to fall even below the minimal number of building permits. Apartment production in the coming years will be substantially lower than the structural demand for new space,
This downward trend is, however, not yet over and developments over the medi- um-term promise to be even more difficult. The number of building permits for new residential projects fell to roughly half the 2021 volume at only 10,545 in 2023.
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Investment Property Report
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