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RSS Feed General News22. 06. 12. - 17:00
Property prices continue to soar
In defiance of the global economic crisis the property market in the capital is continuing to soar with currently no end in sight.
With the city's tourism industry reporting a record number of visitors for the current year so far and the massive investment in making sure that the city looks at its best all year round it is an attractive location with a strong economy.
The residential property price index in Vienna rose by 9.6% (6.9% inflation-adjusted) during the year to end-Q1 2012, more than the year-on-year (y-o-y) price rises during the past three quarters of 6%, 7.9% and 7.8%, respectively, according to Oesterreichische Nationalbank.
During the latest quarter alone (Q1 2012), Vienna’s house prices rose by 4.3% (3.9% inflation-adjusted).
Property prices in the rest of Austria are also rising rapidly. If you exclude Vienna house prices soared by 11% (8.3% inflation-adjusted) during the year to end-Q1 2012. House prices in rose 8.5% (8.2% inflation-adjusted) q-o-q in Q1 2012, after a 1.2% rise in Q4, 4.1% rise in Q3 and a 2.9% drop in Q2 2011. Property price changes in the rest of Austria have been erratic ever since the index was assembled in 2000.
But house prices in Vienna have been rising consistently since Q3 2004. In the first district, the heart and historical centre of Vienna, prices have more than doubled within a decade. From Q1 2005 to Q1 2012, house prices in Vienna as a whole rose by 67% (45% inflation-adjusted), compared to a 33% (16% inflation-adjusted) house price increase in the rest of the country.
One of the reasons for the strong increase in value in Vienna is a difficulty of obtaining new building plots in the centre. Plus it is also the attractiveness of the city as a location for foreign investors - in this case particularly for Russians.
Surrounded by the Vienna Woods the city boundaries are limited and it is difficult for the city to expand - and as a former administrative centre and imperial city in has very few low class neighbourhoods so that almost anywhere in the city could be regarded as a desirable location.
And experts predict that property prices are likely to continue to rise for the remainder of this year despite the economic crisis across the Eurozone.
Institutional investors, banks and companies own around 70% of residential real estate in Vienna’s city centre and part of the reason for the strong demand is that there is little or nothing new coming onto the market. In particularly short supply are larger units over 100 metres squared, which means that their price has risen particularly high.
In the first district of the capital the country's most popular real estate magazine issued weekly in the Kurier newspaper has not launched a single first district house and no more than a handful of houses in districts 2 to 9.
Vienna Times
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