Austrian home prices fell for the second consecutive quarter as families struggle with inflation and higher financing costs.
(Bloomberg) — Austrian home prices fell for the second consecutive quarter as families struggle with inflation and higher financing costs.
Housing prices dropped 0.4% in the first quarter after a 1.9% drop in the last three months of 2022, according to data published by the Austrian National Bank.
While the decrease was lower to start the year, there’s no signs that the downturn is over, according to Raiffeisen Bank International AG, which predicted that the majority of declines are still ahead.
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The 2.3% drop in Austria’s housing market over the past two quarters compares with a 10% total decline projected for 2023 and 2024 by Raiffeisen analysts Matthias Reith and Fabian Blasch. But the decrease is only a fraction of a 34% cumulative increase racked up over the previous three years.
“The long party is over, but the hangover won’t last too long,” the analysts said in a note on Tuesday. “After years of prices climbing higher, we expect a descent and not a nosedive.”
Europe’s real estate markets have been in turmoil after rising interest rates ended a decade-long boom. The sharp increase in borrowing costs and surging inflation has made it harder for consumers to afford home purchases, but tight supply of housing has kept prices from falling drastically.
In Austria, detached homes and existing apartments have led the price declines, while the cost of new buildings increased in the first quarter, which could reflect higher construction expenses and demand for more energy-efficient housing.
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An increasing number of property owners in Austria are trying to sell before price declines get worse. The number of listings rose by a third in April, compared from a year earlier.
At the same time, internet searches for “buying a house” have fallen 36% from the beginning of 2021. An average 30-year home loan with 90% funding will absorb about half of a family’s net income, compared with 30% in 2022.
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