Are Austria property prices falling?

Are Austria property prices falling?

Are real estate prices falling? “There is Sideways movement, but no loss in value”

In large parts of the real estate industry, no decline in prices is expected this year. The buyer principle is naturally viewed critically.

The Franchise broker network Remax, expects this year a decrease of the real estate prices on the level of 2021 – this message came few days ago. With the Austrian federation of the real estate economy (ÖVI) saying “We see a temporary stagnation, but no sustainable loss of value,” Andreas Wollein, ÖVI board member and real estate expert, stated in a press briefing on Tuesday. Here’s why: “There aren’t many market participants who need to sell properties.”

Property developers get fixed prices again

Karina Schunker, residential real estate expert at EHL Immobilien, also stressed at a press conference on Wednesday: “I don’t see prices sinking.” However, the purchase prices would be currently “in rigidity”. The cost drivers of recent years – construction costs and land prices – will settle at a high level.

The demand was clearly declining, the marketing times extended substantially, admitted Wollein of the ÖVI. But in new building projects the prices would not be able to fall at all, because the building costs rose strongly.

At least: On this front, the situation has greatly improved compared to the situation a year ago, said ÖVI property developer spokesman Klaus Wolfinger. Fixed prices are again possible, but the financing costs increased by high interest levels will probably have braking effects on the housing production. But real estates would remain a good and safe investment.

The ordering party principle: “Only losers

The fact that 2023 will be a challenging year for the real estate industry is not only due to the market, but also to political interventions. The buyer principle for agent commissions will come into force on July 1.

ÖVI President Georg Flödl expects “losers on all sides” as a result, as he said with reference to Germany. There, he said, supply has declined with the introduction of the Orderer principle (2015), especially on internet platforms, “which makes it difficult for newcomers to find a home.” Those who are new to a city usually do not yet have access to informal channels, he said.

Flödl expects real estate companies to suffer heavy financial losses, including a decline in jobs, i.e. job cuts. And with the Orderer principle, “dual brokerage will also be laid to rest”; this had been enshrined in the Commercial Agents Act since 1921. The law was, so to speak, the predecessor of the Brokerage Act of 1996. “The special feature of the broker’s service of bringing both sides together as intermediaries and advising them in each case will now be ended by operation of law,” Flödl said.

Commission of the seller?

The ÖVI does not believe that the seller side will step in as commission payer – three gross monthly rents are still possible, in contrast to the tenants, where in 2010 it was reduced to a maximum of two gross monthly rents. Marketing costs would not be able to be passed on in the renting right law (MRG), in contrast for instance to the housing non-profit law (WGG),

The real estate service provider EHL also expects the Orderer principle to have an impact: in combination with inflation and an expected decline in supply, there will be an increase of six to 8.5 percent in rents this year, depending on location, size and equipment. The costs incurred by landlords as a result of the change in the law would probably be priced into rents in many cases.

Lending: Allow interim financing

For the industry more positive changes announce themselves with the relaxation of the credit granting rules, which will possibly become effective in the second quarter. Interim financing should be taken into account, said ÖVI Managing Director Anton Holzapfel; at least this easing is expected in the ÖVI.

According to Karina Schunker of EHL, the currently more difficult interim financing is a particularly big issue for many apartment seekers. The Expert assumes that an easement in this range would already affect itself within short time at the real estate market.

Also the reduction or abolition of the land acquisition tax for people, who buy themselves the first home, is very positive. For Holzapfel such incentives would be “very meaningful”. Also with a more or less simultaneous conversion of both measures – credit granting facilitations and land acquisition tax discounts – Holzapfel would not see the danger that it could come immediately again to an overheating of the market. (Martin Putschögl, Franziska Zoidl, 11.1.2023)

Source: Der Standard




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