Austrian ski property in demand

Austrian alpine property has enjoyed the most growth throughout 2013 and into 2014, according to a report published by Savills.

Austrian ski property in demand
St Anton. Photo: Wikimedia

Overall Switzerland remains the most expensive resort area and the most exclusive. Austria, however, with its stable housing market and prices at half the levels of Swiss property has attracted the attention of investors looking for bargains in the Alpine property market.

Changes to provincial law facilitating purchases from non-EU buyers has resulted in a significant interest from Russian investors, now able to buy in the country through an EU-registered company.

Savills reports that the Austrian Alpine market saw transaction levels double in the first half of 2013 compared to the same period the previous year. This rise in demand has encouraged price growth with prices climbing to 10% more than in 2012.

Positive economic factors continue to underpin the Austrian property market with GDP growth expected to reach 2% and with the lowest unemployment rate in the EU at 4.8%.

The Savills report goes on to say that 72% of recent buyers have purchased for both lifestyle and investment reasons, seeking to let their property when not using it themselves.

This is in line with the government's commitment to continue supporting the tourism industry as it helps to “prevent ghost towns in second home areas”.

Roughly one fifth of Austrian Alpine home buyers are expatriates, living and working abroad.

Jessica Delaney, managing director for an alpine ski property agency in London, told The Local that the market has been doing very well for the past three years. "Austria has a lower entry level than other alpine countries, so the property is cheaper per square metre but the quality is just as good."

"Austria didn't have an overseas property market ten years ago, so it's still relatively new. We're seeing a lot of buyers from the UK, but also from the Benelux countries, Hong Kong, Sweden and the US," she added. 

While the UK remains the chief source of demand for Austrian alpine property, buyers from other northern European countries are also active – although it is the Russians who spend the most on ski property.

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EXPLAINED: How Austria’s new property buying rules could impact you

Anyone buying property in Austria will now need a minimum deposit of 20 percent. Why has this new rule been introduced and how could it impact people trying to get on the property ladder?

EXPLAINED: How Austria's new property buying rules could impact you

From Monday August 1st, anyone applying for a mortgage in Austria will be subject to new rules related to equity and terms and conditions for loans.

The aim is to take some heat out of the property market in Austria, especially after both the Austrian National Bank (OeNB) and the European Council for Systemic Risks recently issued warnings that lending criteria was too lax, according to a report by ORF.

But for some, it will now mean home ownership will become an ever more distant dream as property prices, interest rates and the cost of living continue to rise.

Here’s what you need to know.

READ MORE: EXPLAINED: Why Austria’s rising property prices are causing alarm

What has changed?

The biggest change to house buying rules in Austria is that there is now a mandatory deposit of 20 percent of the value of a property, including additional costs. Previously, banks were simply issued with recommendations about a minimum deposit.

As a result, the OeNB expects a “dampening effect” on the number of home loans being granted in Austria, followed by a drop in property prices in the coming years.

However, in an interview with Der Standard, Willibald Cernko, the new head of Erste Group, called for exceptions for young families who are particularly impacted by the new lending criteria.

Cernko said: “There may be good reasons for the new regulations, but in my view they pay too little attention to young people and those on low incomes. 

“Where are young families supposed to get 20 percent of their own capital, even if both work, unless mum and dad or grandma and grandpa step in?”

FOR MEMBERS: Property buying rules for international residents in Vienna

Another change to the property buying rules in Austria is that mortgage repayments must not exceed more than 40 percent of a buyer’s income.

According to calculations by ORF, this means someone hoping to buy a home for €360,000 (an amount which rarely exists in some regions due to high prices) would need a net income of €3,250 per month to qualify for a mortgage. It is estimated that half of all Austrian households would not qualify.

Additionally, mortgages can only be granted for a maximum of 35 years and loans must not exceed 90 percent of the calculated market value of a property.

READ ALSO: How to keep your apartment cool in Austria this summer amid rising energy prices

Are there any exceptions?

Yes, loans of up to €50,000 will not be impacted by the new rules, which is good news for those seeking finance options for renovation works in their homes, for example.