Residential property prices in Austria and CESEE soar
(, Wien)The steep upward trend in residential property prices has continued – this was recently confirmed by the Oesterreichische Nationalbank (OeNB) in its Property Market Review Q1/22, which analyzes housing market trends, both in Austria and in Central, Eastern and Southeastern Europe (CESEE). In the fourth quarter of 2021, residential property prices in Austria recorded a year-on-year increase above 10% for the fifth time in a row. House prices in CESEE continued to grow steeply as well, with housing market dynamics raising concerns about financial stability risks in several CESEE countries.
Austria: clear uptrend in house prices continued for the fifth quarter in a row – both in and outside Vienna
In year-on-year terms, price growth remained above 10% in the fourth quarter of 2021 − both in Vienna and in the rest of Austria. In Vienna, prices increased by 11.3%, and prices in the other provinces rose by 13.9%. This means that, for Austria as a whole, house price growth reached a new peak at 12.6% (see table 1).
House prices in Austria increasingly misaligned with fundamentals
With a reading of 29.8% in the fourth quarter of 2021 − 7.6 percentage points higher than in the previous quarter − the OeNB’s fundamentals indicator for residential property prices in Austria showed the sharpest increase since the start of the series in 1989. The indicator for Vienna even came to 35.6%, showing an increase of 5.1 percentage points against the third quarter.
| Q4 21 | Q3 21 | Q2 21 | Q1 21 | Q4 20 | Q3 20 | Q2 20 | Q1 20 | Q4 19 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annual change in % | ||||||||||||
| Austria | 12.6 | 10.4 | 11.7 | 12.3 | 10.0 | 9.5 | 5.2 | 3.4 | 3.0 | 11.8 | 7.0 | 3.9 |
| Austria excl. Vienna | 13.9 | 10.6 | 12.8 | 14.9 | 10.7 | 9.7 | 6.8 | 2.8 | 1.2 | 12.8 | 7.5 | 2.6 |
| Vienna | 11.3 | 10.2 | 10.7 | 10.9 | 9.4 | 9.4 | 4.1 | 3.9 | 4.3 | 10.8 | 6.7 | 4.9 |
| Quarterly change in % | ||||||||||||
| Austria | 3.2 | 2.4 | 2.4 | 3.9 | 1.3 | 3.6 | 3.0 | 1.7 | 0.8 | x | x | x |
| Austria excl. Vienna | 4.4 | 1.5 | 2.7 | 4.6 | 1.5 | 3.5 | 3.8 | 1.5 | 0.6 | x | x | x |
| Vienna | 2.1 | 3.3 | 2.2 | 3.3 | 1.1 | 3.7 | 2.4 | 1.9 | 1.0 | x | x | x |
| Index (2000=100) | ||||||||||||
| Austria | 259.3 | 251.2 | 245.3 | 239.4 | 230.4 | 227.5 | 219.5 | 213.1 | 209.5 | 248.8 | 222.6 | 208.0 |
| Austria excl. Vienna | 247.4 | 236.9 | 233.3 | 227.3 | 217.2 | 214.1 | 206.9 | 199.3 | 196.3 | 236.2 | 209.4 | 194.8 |
| Vienna | 298.4 | 292.2 | 283.0 | 276.8 | 268.0 | 265.1 | 255.6 | 249.5 | 244.9 | 287.6 | 259.6 | 243.2 |
| Source: Data Science Service GmbH (DSS), Vienna University of Technology, Prof. Feilmayr, OeNB. | ||||||||||||
House prices in Central, Eastern and Southeastern Europe grew steeply with growth rates above EU average
In CESEE, house prices rose steeply in the second and third quarter of 2021, with growth remaining above the EU average. House price growth in CESEE was driven by several factors: On the demand side, the overall recovery can be seen as one of the key reasons explaining the house price dynamics observed in the second and third quarter of 2021. Moreover, partly generous government measures to support the purchase of residential property in several CESEE countries pushed up demand for housing. In terms of financing conditions, housing loan growth was supported by low interest rates. Rising construction costs and an overall shortage of input material have constrained the supply of new housing, eventually translating into additional pressure on house prices. Overall, housing market dynamics are raising concerns about financial stability risks in several CESEE countries.