Why Salzburg, Tirol and Vorarlberg have some of Austria's highest rents
According to new figures published by Statistics Austria , Salzburg, Tirol and Vorarlberg had the highest rents in Austria, with a national average increase of 6.7 percent over the course of 2023. What’s leading to these rental surges?
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As is often the case, a sharp rise in average rental prices is a combination of factors - market conditions, and the demand a certain location generates.
Market factors
Despite the Richtswert system, introduced in 1994 to regulate the standard rental price per square metre of apartments across each of Austria's federal states, inflation and cost-of-living increases—such as those introduced after the beginning of the war in Ukraine—can and have impacted rents.
Salzburg now has the highest rents, averaging €11.30 per square metre. Tirol and Vorarlberg follow closely behind, at 10.9 and €10.7, respectively.
Carinthia and Burgenland have the nation's cheapest rents, at €7.30 and €7.20 per square metre.
Upon releasing today's figures, Statistics Austria General Director Tobias Thomas noted that rental price increases have been "significantly less strong than in previous quarters, but still about twice as high as before the strong surge in inflation."
Recent government moves to incentivise owners to make their properties more energy-efficient may also be contributing to increases —with a fifteen percent tax deduction available on 'climate-friendly' refurbishments, many landlords may be accruing additional costs renovating properties.
Another factor that may impact rental rates is the new levies that individual states will be permitted to apply to those purchasing or maintaining second homes and vacation rentals, particularly in areas with high visitor numbers. This is particularly relevant regarding Salzburg and Tirol.
Read More: How Austria's new plans to avoid a housing crisis will affect residents
Location plays a role
The three states with the highest rental prices in Austria also share several factors in common.
Salzburg, Tyrol, and Vorarlberg are all high-tourist areas. While Salzburg's beauty, heritage, and links to Mozart are perennial draws for visitors, Tyrol and Vorarlberg are mountainous regions with several popular ski resorts. They are a favourite destination for visitors throughout the year.
This popularity results in investors using properties for short-term Airbnb rentals - something many states are cracking down on to stop a housing shortage and prevent soaring rents.
Read More: EXPLAINED: What are Austria's rules for Airbnb rentals?
These three states are also experiencing a business boom, with many leading companies attracting talent.
Salzburg has energy drink giant Red Bull and supermarket holding company Hofer, while Tyrol has a significant Sandoz antibiotic manufacturing plant and several market leaders in timber, such as Johann, Egger and Binderholz, headquartered there.
Vorarlberg is also a centre for machinery production, with market leaders Liebherr, Suzano, and Alpla all having a significant presence in the state.
Another factor that Salzburg and Vorarlberg have in common is their border with Germany—cross-border traffic and tourism lead to a high demand for rental properties.
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As is often the case, a sharp rise in average rental prices is a combination of factors - market conditions, and the demand a certain location generates.
Market factors
Despite the Richtswert system, introduced in 1994 to regulate the standard rental price per square metre of apartments across each of Austria's federal states, inflation and cost-of-living increases—such as those introduced after the beginning of the war in Ukraine—can and have impacted rents.
Salzburg now has the highest rents, averaging €11.30 per square metre. Tirol and Vorarlberg follow closely behind, at 10.9 and €10.7, respectively.
Carinthia and Burgenland have the nation's cheapest rents, at €7.30 and €7.20 per square metre.
Upon releasing today's figures, Statistics Austria General Director Tobias Thomas noted that rental price increases have been "significantly less strong than in previous quarters, but still about twice as high as before the strong surge in inflation."
Recent government moves to incentivise owners to make their properties more energy-efficient may also be contributing to increases —with a fifteen percent tax deduction available on 'climate-friendly' refurbishments, many landlords may be accruing additional costs renovating properties.
Another factor that may impact rental rates is the new levies that individual states will be permitted to apply to those purchasing or maintaining second homes and vacation rentals, particularly in areas with high visitor numbers. This is particularly relevant regarding Salzburg and Tirol.
Read More: How Austria's new plans to avoid a housing crisis will affect residents
Location plays a role
The three states with the highest rental prices in Austria also share several factors in common.
Salzburg, Tyrol, and Vorarlberg are all high-tourist areas. While Salzburg's beauty, heritage, and links to Mozart are perennial draws for visitors, Tyrol and Vorarlberg are mountainous regions with several popular ski resorts. They are a favourite destination for visitors throughout the year.
This popularity results in investors using properties for short-term Airbnb rentals - something many states are cracking down on to stop a housing shortage and prevent soaring rents.
Read More: EXPLAINED: What are Austria's rules for Airbnb rentals?
These three states are also experiencing a business boom, with many leading companies attracting talent.
Salzburg has energy drink giant Red Bull and supermarket holding company Hofer, while Tyrol has a significant Sandoz antibiotic manufacturing plant and several market leaders in timber, such as Johann, Egger and Binderholz, headquartered there.
Vorarlberg is also a centre for machinery production, with market leaders Liebherr, Suzano, and Alpla all having a significant presence in the state.
Another factor that Salzburg and Vorarlberg have in common is their border with Germany—cross-border traffic and tourism lead to a high demand for rental properties.
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