The Austrian real estate market remains one of the most stable yet simultaneously one of the most conservative in Europe. In 2025, the market situation is expected to differ little from the previous year. However, an uptick in sales is anticipated due to the gradual reduction in loan interest rates. We will discuss these and other trends in our article.
Projected Prices for Residential Real Estate in Austria
In major cities such as Vienna and Salzburg, property prices are expected to remain stable. Demand for housing, particularly in central areas, will continue to be high. At the same time, the price growth seen in previous years is slowing down. This creates opportunities for buyers who previously could not afford property in these regions.
According to statistics, the average cost per square meter in Vienna in 2024 was approximately €5,500. This figure is expected to remain almost unchanged in 2025, with potential fluctuations within the range of 2-5%.
In central districts of Vienna, such as Innere Stadt, the average cost per square meter can exceed €10,000, reaching as high as €25,000-30,000. This is easily explained by the fact that there is virtually no new construction in central areas, with only renovations and minor extensions of historic Altbau buildings being possible. Meanwhile, in suburban districts like Floridsdorf, prices remain at around €3,500-5,000 per square meter. There is also a growing demand for apartments with terraces and views of the Danube.
One of the key trends in 2025 could be a 5-10% decrease in prices compared to 2024 on the secondary real estate market, particularly in rural areas and regions with low economic development.
Housing Construction Volumes in Austria
In previous years, Austria has seen steady growth in housing construction volumes. Specifically, in 2023, approximately 60,000 new apartments with a total area of about 4.5 million square meters were completed. Given the stable demand and government initiatives to provide affordable housing, it is expected that construction volumes in 2025 will remain at similar levels or increase by 2-3%.
Vienna, as the capital and largest city of Austria, traditionally leads in housing construction volumes. In 2023, approximately 15,000 new apartments with a total area of about 1.2 million square meters were built in the city. Given the constant population growth and demand for housing, it is planned that these figures will be maintained or even increased by 3-5% in 2025. However, these numbers do not fully meet the demand for housing. Despite the sharp decline in purchasing power among Austrians, developers continue to maintain high property prices, understanding that there is a shortage of new buildings, and sooner or later, a buyer willing to pay the proposed (even sometimes somewhat inflated) price will emerge.
Trends in the Rental Market
Due to economic uncertainty and rising construction costs, more people are choosing to rent rather than buy. This may lead to an increase in rental rates in major cities, while in rural areas, they will remain stable due to low demand. Investors considering the purchase of properties for rental purposes can expect stable, though not high, returns.
We have already written about changes in rental rates in 2023. Looking ahead to 2024, the average rent for a one-bedroom apartment in Vienna was approximately €800 per month. In prestigious districts, such as Döbling, the rent for similar properties reached €1,200-1,500, depending on the quality of the property. The rental cost for VIP-class housing could range from €8,000-10,000. In 2025, rental prices are expected to remain at about the same level, with an increase of 3-5% due to the inflation index.
Reduction in Interest Rates
The increase in mortgage interest rates in previous years put significant pressure on the market. Many buyers postponed their purchase decisions or were forced to choose smaller properties, which affected the overall sales volume in 2023-2024. For example, 2023 was considered the worst year for the Austrian real estate market in the last 15 years. Although there was some recovery in the market in 2024, the real estate market remained in stagnation. In 2025, a gradual but steady increase in residential property sales is expected.
The main prerequisite for such expectations is the level of interest rates on loans in Austria. In 2024, a gradual decrease in rates began. On June 6, 2024, the ECB lowered key interest rates for the first time since March 2016. In July 2024, there was a pause, followed by further interest rate reductions in September, October, and December 2024. Starting from December 18, 2024, the average interest rate is at 3% annually. As a result, the base interest rate for deposits dropped by 1.0 percentage point compared to the highest level. Of course, this interest rate remains relatively high, but buyer activity has significantly increased compared to the previous period.
Conclusion
Therefore, 2025 is expected to be more dynamic and active than the previous few years. On one hand, we can expect an increase in construction volumes, and on the other, a reduction in interest rates, which, combined with the traditionally high demand for housing in large cities, should lead to a recovery in the residential real estate market. At the same time, the situation in small towns and villages is highly likely to remain stable.
