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Property in Austria: Real estate in high demand in Tyrol

Stay up-to-date on the latest Austrian property news with The Local's weekly roundup.

Property in Austria: Real estate in high demand in Tyrol
Buying property in Austria as a foreigner can be tricky - depending on where you are from. Photo by Datingscout on Unsplash

Thinking of buying a house, moving house or investing? Or are you just curious about the property market in Austria? 

Here’s what you need to know.

One in three people in Tyrol want to buy property

Results from a new survey by the Institute for Market Research and Data Analysis (IMAD), shows one in three people in Tyrol want to buy their own property in the next three years, and one third want to buy a privately financed property.

Furthermore, 58 percent of Tyroleans believe more residential properties are being bought by foreign investors.

There are also concerns in Tyrol that property is increasingly becoming too expensive for local people. 

READ MORE: Where are real estate prices on the rise in Austria?

However, leading figures in Tyrol’s real estate industry are now criticising imposed orders on a municipal level to stop construction on privately financed apartments to make way for subsidised housing projects (mostly for local people).

Instead, they say stopping construction on private projects will only exacerbate the problem and increase prices further.

Property prices rose in Vienna in second quarter of 2021

In the second quarter of 2021, real estate prices in Vienna rose by 10.7 percent, according to new figures by Oesterreichische Nationalbank (OeNB).

In Austria, property prices rose by 12.3 percent in the first quarter, and 11.7 percent in the second quarter.

The report looked at property prices in countries across Central, Eastern and Southeastern Europe (CESEE).

Prices and demand for residential real estate in the region continues to be high, despite affordability issues starting to surface in some countries.

The report also noted the construction industry is experiencing shortages of building supplies and labour, which is being reflected in property prices in some countries.

Real estate crowd investing platform to launch in Austria

As the real estate boom in Austria continues, a new option is launching for investors in the form of a crowdinvesting platform.

Rendite Boutique will launch on October 14th with a special focus on sustainable construction projects. The platform allows users to start investing in real estate projects from as little as €50.

Dominic Lorenz, co-founder of Rendite Boutique, says the returns on properties offered on the platform will be between six and eight percent.

Lorenz adds that only projects with a positive financing commitment from an Austrian or German bank are available for investment.

READ ALSO: Vienna tenant has rent slashed because of crime-riddled neighbourhood

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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.