REAL ESTATE: trends for 2024 and forecasts for 2025

In the last week of the year we decided to talk about a topic that concerns most of our readers – the situation on the Austrian real estate market. Today we have as our guest Dr. Alexander Predein, a partner of the well-known Viennese real estate agency 4M-Immobilien.

– Alexander, a few days ago your colleague and business partner Mr. Zoran Kalabic in an interview with Forbes (www.forbes.at/artikel/strategische-chancen-fuer-investoren) said that the real estate market is going through dramatic times and urged property owners to sell it. Is the demand for real estate really that bad?

– Demand is always driven by several factors. On the one hand, the population of the city of Vienna is growing, the Austrian capital ranks year after year as the best place to live in the world. But newcomers do not play a decisive role in the housing market, most transactions are between Vienna residents, who have been severely restricted by the new mortgage conditions for the last two years. Only one out of ten Vienna residents gets a mortgage loan, and that often not in the amount needed to buy the desired apartment. Therefore, real estate prices are going down.

– How much down?

– There are different estimates, according to our data, for the second year in a row, prices have fallen by about 15%. To establish this, you have to look at what price the real deals are made at. Roughly speaking, an object is put on the market at one price, but buyers are desperately bargaining, and deals are made at a discount. We sell about five hundred objects a year and have a sufficient database to analyze the market.

– But why should we sell now and not wait until prices go up again?

– There is no reason for prices to rise further now. If you look at the dynamics of real estate prices over the past decades, you can clearly see that prices have been rising at the rate of inflation. The explosive growth started after the 2008 crisis, when the world’s major central banks flooded the economy with cheap money. It peaked in 2019-2020, when almost anyone could get a loan priced at less than 1 percent APR. Do you believe those times will return in the foreseeable future? Many consumers, meanwhile, are struggling and taking losses. I know people who have a loan payment comparable to their current household income. Life situations change, people get divorced, lose their jobs, and find themselves alone with debt obligations. The only true solution is to get rid of the apartment as soon as possible, so as not to get into even more debt.

– But in the middle of 2025, the KIM-VO lending regulations will cease to apply and the requirements for borrowers from the banks will become softer. Won’t that increase the demand for real estate?

– You know I like to believe in all good things too, but miracles rarely happen. Even the announced easing of credit rules will not lead to higher prices. It may spur demand, maybe, but in general, we are not expecting loans at 1 percent, are we? If money does fall in price to its former values, it will not be in a year or two, but for now people have to live, sometimes to survive.

– Alexander, another question. We have a Russian-language edition, so we are interested in how things are now for Russian-speaking clients?

– Things are different, just like everyone else. I am known in the Russian-speaking environment, I often work with people from the post-Soviet space, although most of my clients are German-speaking. There are those who want to buy real estate in Austria. The reasons are the same as always – successful people diversify risks, buy real estate in more stable and prosperous countries, and Austria is among them. Do you know that the most common language of people living in the first district of Vienna – Russian?
There are those who want to sell, some need money for business, others are moving away with grown up children, others are getting rid of investment apartments. Among Russian-speaking clients is very high segment of exclusive real estate and objects in excellent condition.

– Is it easier or more difficult to work with Russian speakers?

– It is difficult to answer unequivocally. Of course, it is easier to speak your native language, but this does not mean that it is easier to work with them.Often people from the former Soviet Union, especially those wishing to buy real estate in Vienna from abroad or recently arrived in Austria start to act without studying the local laws and get into difficult situations. The main difficulties are encountered when buying real estate for repair, reconstruction and further renting. I see sometimes overconfidence, which inevitably leads to mistakes. But most of my clients, both Russian and German-speaking – adequate and sensible people, with whom even after the transaction we maintain good relations. After all, every real estate transaction brings good emotions and happiness – someone gets the apartment of his dreams, and someone follows the advice of experts and sells his object profitably.

Taking this opportunity, I would like to congratulate our readers on Christmas and New Year, wish you all health and success in the coming year. Do not put off your dreams, and be happy!

Alexander Predein, partner at 4M Immobilien, which with a team of more than 50 employees offers free and accurate appraisals of apartments, houses and land in Vienna and the surrounding area.