Real estate bubble: 'The hype is over'
Austria has experienced something of a real estate bubble in recent years, but some experts believe the market is now calming down.
Specialists from the Austrian Chamber of Commerce’s advisory group on real estate have said that while property costs increased significantly in 2013, current signs suggest that this year growth should be relatively flat, according to the Wirtschafts Blatt.
“While there continues to be a general upwards trend - in many regions the price increases have stopped, the hype is over," real estate chairman Thomas Malloth explained.
In January, the Austrian National Bank (ÖNB) warned of the possibility of a real estate bubble, with prices in Vienna for selected apartments rising by 21 percent over the previous 12 months. Tenants have been complaining about rising rents, which seem to have been driven by speculative investors.
It’s not only the 'property sharks' who are driving up the market, as institutional investors such as pension funds and insurance companies have been fuelling price growth, according to a report in Contra Magazine, with an estimated €650 million flowing into that sector just in the first quarter of 2014.
The largest part of the growth however has originated from foreign investors. The Austrian town of Klosterneuburg, less than 15 minutes’ drive from Vienna, has seen substantial interest from Russian investors.
According to one source, there are more than 100 wealthy families from Russia who have invested in properties there, especially at the top end of the market, with multi-million euro mansions.