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Last Updated: Mar 28, 2017




Austrian housing prices continue to rise, as economic growth accelerates further. In Q3 2016, the residential property price index in Austria was up by 7.2% (6.43% in real terms) y-o-y, based on figures from the Oesterreichische Nationalbank (OeNB). In a quarterly basis, property prices fell by 0.9% (-0.8% in real terms) in Q3 2016.
  • House prices in Vienna, Austria's capital, rose by 2.5% (1.75% in real terms) during the year to Q3 2016. During the latest quarter, Vienna's residential property price index fell by 0.4% (-0.3% in real terms) from the previous quarter, an improvement from a 2.4% q-o-q decline (-3.2% in real terms) in Q2 2016.
  • While house price increase were subdued in the capital, the residential property price index in the rest of Austria rose sharply, by 9.6% (8.8% in real terms) y-o-y in Q3 2016. However, during the latest quarter it fell by 1.1% (-1% in real terms).

Statistics Austria confirms this general picture, reporting that the overall house price index rose by 5.2% (4.5% in real terms) during the year to Q3 2016, following price rises of 9% y-o-y in Q2 and 13.4% y-o-y in Q1 2016.

By property type:
Austria annual house price change graph
  • For new dwellings, the average price rose by almost 4% (3.2% in real terms) during the year to Q3 2016, and increased by 2.9% (3% in real terms) from the previous quarter, according to Statistics Austria.
  • For existing dwellings, the average price was up by 5.4% (4.7% in real terms) y-o-y in Q3 2016 and rose by 0.1% (0.2% in real terms) from the previous quarter.
  • For existing houses, the average price surged by 7.1% (6.3% in real terms) in Q3 2016 from a year earlier and rose by 1.5% (1.6% in real terms) from the previous quarter.
  • For existing flats, the average price rose by 4.7% (3.9% in real terms) y-o-y in Q3 2016, but slightly fell by 0.5% (-0.4% in real terms) from the previous quarter.

There are no restrictions on foreigners buying properties in Austria.

Analysis of Austria Residential Property Market »


RENTAL YIELDS
Last Updated: Aug 12, 2015



For a long time home prices have been rising in Vienna. Result: gross rental yields - the return on investment on a property before all expenses - is now very low, at around 3.5% for a 120 square metre (sq. m.) apartment in a non-InnereStadt area, or 2.1% elsewhere.

You would not buy an apartment in Vienna now for the rental return.

That has implications for the wisdom of investing in Vienna. Generally, when yields reach a nadir, it is a sign that the market is about to turn - although some international cities like Monaco appear comfortably to weather minuscule yields for long periods of time.

Innere Stadt is Vienna’s most luxurious and least populated district, with roughly 17,000 inhabitants. But with a workforce of around 100,000, it is Vienna’s largest employment locale.

Apartments in Innere Stadt change hands at around EUR 10,000 to EUR 17,00 per sq. m., whereas in the other areas apartments cost around only EUR 4,000 to EUR 6,000 per sq. m.

Innere Stadt apartments fetch higher rents, ranging from EUR 18 to EUR 20 per sq. m. per month. These have not increased in the past two years. In the other upscale districts of Vienna, rents range from EUR 14 to EUR 15 per sq. m. per month.

Salzburg apartments cost around EUR 3,300 to EUR 4,600 per sq. m. Rents on Salzburg apartments are close to Viennese levels, at around from EUR 14 per sq. m. per month. Salzburg gross rental yields range from 3.5% to 5.3%.

Apartments are most affordable in Graz, where apartments cost, on average, EUR 2,600 to EUR 3,100 per sq. m. In Graz, rents range from EUR 9.50 to EUR 12.50 per sq. m. per month.

Gross rental yields are the highest in Graz - slightly higher than in the smaller Salzburg - ranging from 3.7% to 5.5%. The smallest apartments return the highest rental yields.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Nov 10, 2016



Rental Income: Tax rates in Austria are highly progressive, so that owners of larger properties are likely to have to pay heavily, though deductions are available.

Nonresidents suffer special penalties, the tax base of each nonresident individual being notionally increased by €8,000 – see Baker & Tilly’s worked example, footnote 7.

Capital Gains: Capital gains realized from properties which were acquired as of 31 March 2002 is subject to capital gains tax at a flat rate of 27.50%.

Inheritance: Inheritance tax is abolished effective 01 August 2008 and will be replaced by an ‘information duty’ to authority or ‘gift reporting tax’.

Residents: For Austrian residents, worldwide income is subject to Austrian taxation.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Nov 11, 2016



Total roundtrip transaction costs are high at between 9.40% and 13% of the property value or sales price. Bear in mind that Austrian lawyers charge on a per hour basis, at rates fixed by the lawyers’ association, so that a lawyer’s costs may be proportionately higher for small apartments. It takes about 32 days to complete the three procedures needed to register a property.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: May 29, 2006



Austria housesAustrian law is tenant-friendly, with rent control at somewhat below free-market levels.

Austria houses Rent Appeals: Tenants can appeal to a rent tribunal even after they have left the apartment, and reclaim rent ‘overpaid’. However with new rentals, the difference between what the rent tribunal would assess and free market prices is very small.

Tenancy Laws: The two sources of tenancy laws are the “ABGB” (General Civil Code) and the “MRG” (MietrechtsG, TenStatute), of 1982, as frequently amended. It is sometimes difficult to know whether both laws simultaneously apply (flats are covered by the much more restrictive MRG).

“The frequent amendments and its complex regulations…make the MRG and the regulations connected to it rather a “dark” discipline which is normally only overseen by lawyers specialized in the field of tenancy law,” notes the EIU Tenancy Law Project Austria survey.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Mar 28, 2017


Positive economic outlook in 2017

austria GDP and inflation chartDuring the year to Q4 2016 Austria's economy grew by 1.8%, its fastest acceleration since Q3 2011. The Austrian economy has stagnated for the past four years, posting real GDP growth rates of 1% in 2015, 0.6% in 2014, 0.1% in 2013, and 0.7% in 2012, according to the Austrian Institute of Economic Research (WIFO).

"Growth in the fourth quarter was once again determined by consumption and investment demand, while exports' contribution to GDP was again negative," said WIFO.

Austria's economic growth is expected to remain positive in the next two years at 1.5% in 2017 and 1.4% in 2018, according to WIFO. The Austrian economy is mainly driven by exports, mostly to its biggest trading partner, Germany. More than 75% of Austria’s exports go to Europe, 30% to Germany.

Austria experienced relatively strong economic growth from 2004 to 2007 with an average annual GDP growth of 3%. After contracting by 3.8% in 2009, the economy emerged from recession with growth rates of 1.9% in 2010 and 2.8% in 2011.

Austria's budget deficit was predicted at around 1.4% of GDP in 2016, up from 1% the previous year, according to the European Commission. The deficit is expected to fall to 0.9% in 2018. The country’s gross public debt was estimated at 83.6% of GDP in 2016, according to the European Commission, and is projected to drop to 79.3% of GDP in 2018.

Unemployment was 5.7% in December 2016, down from 6% at end-2015, according to Statistics Austria, despite the rise in accepted asylum seekers. Despite this, Austria’s jobless rate remains well below the EU average of 8.6% in 2016.

Inflation stood at 2% in January 2017, the highest rate recorded since July 2013, due to higher fuel prices, according to Statistics Austria. Inflation is expected to slow to 1.6% in 2018, according to the European Commission.







  • Stable political system
  • Moderate transaction costs
  • Moderate yields for new units
  • Complicated pro-tenant system
  • Moderate to high rental icome taxes
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €10,807 For a 120 sq. m. property, usually an apartment.
Rental Yield: 2.18% For a 120 sq. m. property, usually an apartment.
Rent/month: €2,351 For a 120 sq. m. property.
Income Tax: 24.92% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 11.20% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 27.50% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.




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