The economist Matthias Reith expects a “noticeably slower travel speed”.
The turnaround in interest rates initiated by the ECB will follow
Raiffeisen economist Matthias Reith expects that years of upward trend will now also lead to a leveling off in price increases on the market for residential real estate. He expects a “noticeably slower travel speed”, so there should not be a longer-lasting or sharp price correction. “What has risen high does not necessarily have to fall low,” he said at a press conference on Wednesday.
Pandemic as a price driver
Real estate prices in Austria have been rising since April 17
years continuously, so that’s the Austrian
Global real estate cycle considered one of the oldest yet
ongoing, according to the economist. Recently, the pandemic has also been considered
Price driver worked. This is closely related to the discussion
about the affordability of residential real estate. The price increases on the real estate market have so far been offset by falling interest rates, so that the monthly credit burden has hardly increased.
They are slurred
In the fight against high inflation, the European Central Bank
(ECB) recently raised interest rates for the first time in ten years. As a result, loans are also becoming more expensive, and households with real estate loans with variable interest rates are already feeling the effects, said Reith. He expects interest rates on variable real estate loans to rise to more than three percent in 2023. That was last the case in 2009. Despite the rise in interest rates, the credit burden should hurt, “but not go beyond the pain threshold,” the economist expects.
The following applies: the longer the purchase was made, the more relaxed it is
households could take advantage of the turnaround in interest rates. Reasons are one
lower purchase price, a more advanced repayment and a
higher household income. Due to the rising interest rates on loans, the hurdle for the purchase of living space is getting higher, “but not insurmountable,” said Reith. Anyone who buys a property in the next year will have to spend around 43 percent of their net household income on interest and principal.
Subdued demand
Rising interest rates are likely to increase demand in the real estate market
dampen and thus also slow down the rise in prices. With a
However, the economist does not expect a sharp price correction. That would
the case when rising credit rates meant that
Property owners can no longer afford to maintain their property
could and would be forced to sell. Then one would come
decreased demand increased supply. There are currently no signs of such a development for Reith on the Austrian market.
In principle, the affordability of living space lies in Austria
in the EU comparison in the middle, explained Caspar Engelen from
Raiffeisen Research. In their own home, the Austrians would have
According to Eurostat 2020, Austrians average around 18 percent
of their net household income for housing costs. Anyone who lives for rent had to spend around 22 percent of their disposable income on it. The ownership rate was around 55 percent in 2020, around half of which were owners whose loan had already been paid off.
High burden for low earners
People with low incomes are significantly more heavily burdened.
According to a Gallup poll commissioned by Raiffeisen Immobilien,
every third person with an income of less than 1500 euros per
month, difficulty affording housing.
Overall, the affordability of housing is a much-discussed topic
topic, said Peter Weinberger from Raiffeisen Immobilien. He sees
the refurbishment of used real estate and the revitalization empty
standing building as the key to creating more affordable
Living space and referred above all to abandoned town centers in rural regions.
In Vienna it is necessary to check whether the existing social housing is distributed fairly. In addition, tenancy law must be simplified so that owners do not shy away from renting out of legal uncertainty or fear of problems. (APA)
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