Property Futures

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Property Investment in Austria Comes With A High Cost of Living

Article: Residential real estate in Austria is expensive but may be worth the investment.

Property in Austria will always be on the list of properties for global investors but the cost of living is a deterrent for some would-be investors.  As the most expensive country in Europe to live in, this can act as a wet blanket on the enthusiasm of buyers.

Austria is one of the most beautiful places in central Europe and has plenty to offer visitors and residents alike. Despite the high costs, the country attracts many affluent tourists, especially skiing and hiking enthusiasts. The rich cultural heritage also has its share of followers.

austrian real estate market analysis

Austrian property market analysis

This means it’s an ideal investment destination for buy-to-let properties.

Residential property in Austria

The housing market has a well-deserved reputation for stability because Austrians tend to hold their property for many generations.

In fact, house prices in Austria have been strong and in cities like Salzburg and Vienna, growing some 20% since 2009.

  • The locals have shown a preference for investment in real estate, accounting for the strong price growth, especially in apartments.
  • Some of the increased activity can also be attributed to many investors switching to residential real estate from the office market (which is in bad shape).

Prices

Apartment prices in the central district of Vienna (the most expensive in the country) average about EUR €10,000 per square meter and can cost as much as EUR €16,000 per square meter.

  • Prices in Salzburg are about the same and almost as high in 2 other university towns, Innsbruck and Graz.
  • Prices in the countryside are not as high and, with the exception of some ski resorts, prices are much lower in areas more than 1 hour’s drive from the cities.

Foreign investment

There are restrictions on the purchase of property by foreigners and these can be stringent for citizens of countries outside the European Union.

  • The restriction applies both to foreign individuals and foreign-owned companies.
  • By law, foreign investors can only buy real estate with the permission of the authorities governing the federal land on which the property is located. These authorities make up their mind based on the best interests for the land concerned.
  • In the so-called second-home zones, any foreigner can buy property as an individual and live there, but these zones are small and few in number.
  • Austria has considerably eased the restrictions for foreigners but any capital gain from the sales of property is taxed at a punitive rate of 34%.

Buy-to-let investments

If you are looking for income properties, you should think about the regular flow of tourists throughout the year and perhaps look for property around the Alps where you can expect a regular rental income.

Otherwise, you should look for property in and around cities like Salzburg and Vienna which are home to the majority of the local population.

The bottom line

If you can live with the high cost of living, here are some reasons why you should consider investing in Austrian property:

  • Flourishing economy
  • Stable government and political system
  • Membership of the European Union
  • High degree of safety and security
  • First-rate medical facilities

The peculiar real-estate laws in the country mean that you should seriously consider hiring a local estate agent or lawyer to handle property related formalities.  They will also be useful if you are looking for a mortgage from a local Austrian bank.

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2 comments on “Property Investment in Austria Comes With A High Cost of Living

  1. Nikodemus Colloredo-Mannsfeld
    June 5, 2013

    Hello James,
    You make Austria sound as expensive as Switzerland or London – very flattering. The Vienna €10.000,- is really the upper crust for appartments in the first district. In Areas outside Prices figure more from €3.500 to € 7.000,-.

    Currently the country is pretty much under Danube water after heavy rain so donations for inundated towns are welcome ….

    regards,
    Nikodemus

    • PropertyFutures
      June 10, 2013

      Hi Nikodemus, thank you for the comments, sorry to hear about the Danube, hope the water recedes soon!James

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