A sharp drop in new housing and rising construction costs are pushing Vienna toward a housing shortage, with experts warning the situation will worsen over the next few years.
According to a recent analysis reported by Der Standard, the city will see only around 8,000 to 9,000 new residential units completed in 2025 – less than half the 21,000 finished in 2022 and far below what researchers say Vienna needs.
Housing researcher Wolfgang Amann of IIBW and Clemens Biffl, spokesperson for property developers at the Vienna Chamber of Commerce, both estimate that the capital requires around 12,000 new homes a year simply to keep up with population growth, the report said. Amann expects this level of demand for at least the next decade. Nationwide, Austria would need approximately 50,000 new units annually, but completions are trending downward, reaching around 40,000.
In Vienna, Amann expects fewer than 10,000 new homes per year for the next several years, which is well short of the target.
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From building boom to construction bottleneck
The current crunch follows an intense building boom. In 2022, Austria completed more than 77,000 homes, 47,500 of them in multi-family buildings. Vienna added more than 21,000 that year. But the rapid rise in interest rates from mid-2022 pushed many developers into crisis.
Prominent firms such as Signa, 6B47 and Süba fell into insolvency, leaving many planned projects frozen until receivers sell the land or find investors. Smaller developers have faced similar pressures. The result is a widening gap between a growing population and shrinking construction output.
According to Marc Steinke, Head of Research at CBRE Austria, Vienna is a clear example of the “structural undersupply” now shaping the national housing market, a separate Der Standard report added. Population growth, high construction costs, and falling completion rates mean demand far exceeds supply. Even improving financing conditions, such as falling interest rates and the expiry of Austria’s strict KIM mortgage rules, are not enough to shift the balance.
CBRE expects around 8,800 large new units to be completed in 2025, approximately 20 percent fewer than in 2024.
Only a slight rise to under 10,000 is predicted for 2026, which Steinke says is “too little to provide relief.”
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Where new homes are still being built
Despite the slowdown, cranes remain visible in major development zones such as “An der Schanze” in the 21st district and “Village im Dritten” in the 3rd. This year, more than half of all new units are being built in Floridsdorf (21st district) and Donaustadt (22nd), where land is cheaper and reserves larger.
Steinke expects these outer districts to remain the focus.
Rising construction prices mean rising purchase prices: the average cost for new owner-occupied homes has climbed by about five per cent to around €6,500 per square metre. Prime rents are 5.4 percent higher, at around €19.40 per square metre, especially in the inner districts and Donau-City.
New builds below €6,000 per square metre are now mostly in peripheral areas.
Immo Analytics stated that this price segment accounts for approximately 18 percent of planned 2025 completions, decreasing to 10 percent in 2026 and only 3 percent in 2027. Meanwhile, they expect total supply to fall further in 2026 and 2027, shifting Vienna towards a seller’s market and, eventually, to a genuine shortage.
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Why are projects being delayed?
High construction costs, fewer building permits and financing difficulties all contribute to delays.
Since May 2025, about 18 percent of projects scheduled for completion by late 2026 have already been postponed by at least three months, some by up to a year, according to Immo Analytics.
Developer spokesperson Biffl told Austrian media that banks now demand higher pre-sale quotas before releasing funding. That means more buyers must commit “off plan,” based purely on drawings – a model familiar to investors but less attractive to private buyers.
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What can Austria do?
City Housing Councillor Kathrin Gaál argues that the subsidised housing sector remains strong, with 22,000 units under construction or planning as part of Vienna’s housing initiative. She says tax incentives requested by developers are a federal matter.
From the Neos, club chair Selma Arapović highlights the recent increase in the housing contribution paid by employers and employees (from 0.5 to 0.75 percent), which is earmarked for construction and social infrastructure.
The Greens take a more urgent tone.
Housing spokesperson Georg Prack says Vienna’s population has grown by an average of 23,420 people per year since 2020, resulting in an annual demand for approximately 11,500 additional flats. With new construction lagging far behind, Prack warns the city is heading toward a housing shortage “with fatal consequences for affordability.”
For anyone planning to rent or buy in Vienna, the trend is clear: demand is outstripping supply, especially in central and mid-price areas.
More choices exist in outer districts, such as Floridsdorf and Donaustadt, but overall availability is tightening. Prices show no sign of easing next year. Flexibility in neighbourhood, timing, and budget will be increasingly crucial for house-hunters in the coming years.
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Useful vocabulary
Wohnungsknappheit – housing shortage
Bauträger – property developer
Baugenehmigung – building permit
Wohnbauförderung – housing subsidy scheme
Gemeindewohnung – municipal housing
Leerstandsabgabe – vacancy tax
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