The owner-occupied property market in Vienna:

Upwards trend with a slight deceleration

The owner-occupied property market in Vienna is turning out to be relatively unaffected by the corona virus. After a very quiet period during the two weeks after the lockdown was initiated in mid-March, the demand for owner-occupied properties in the upper price segment (from around Euro 7,000 per square metre) has risen again in April. "Contracts are still being exchanged in all price sectors, including for many millions", says Richard Buxbaum, Head of the Residential. Even in the middle price sector, between Euro 4,000 and 7,000 per square metre, there has been virtually no drop in the number of legitimate enquiries. "Demand is particularly strong for owner-occupied apartments, both for property development projects and individual dwellings. The share of owner-occupiers predominates among the searchers at 70 per cent", reports Sonja Kaspar, pensions expert and manager of Otto Immobilien Boutique.

The marketing and sales processes, however, are taking longer to complete, and in some cases transactions are being postponed. The reasons for this are primarily the current changes in the framework conditions: virtual viewings are proving very popular, however they do not in many cases replace personal advice and therefore the decision to buy is often being pushed back until the strict conditions on going out have been lifted. Buyers who assume that there will be a price adjustment downwards are also currently holding back. Added to this is the fact that notaries and lawyers have also had to adjust to the new situation. In summer, however, say the experts, there will once again be more movement in the market. 

Relaxed owners and sellers

When asked by Otto Immobilien, the majority of property owners and project developers of high-quality apartments have a relatively relaxed view of the current situation. "They are generally able to weather delays from a financial perspective and are primarily anticipating very stable prices in this market sector", say Richard Buxbaum and Sonja Kaspar. The project developers are relieved, as work has generally resumed on construction sites suspended at the beginning of the corona crisis and the initial material bottlenecks have now resolved. However, delays in construction procedures, which will take more time, are seen as a current dilemma, say Richard Buxbaum and Sonja Kaspar.

A closer look at the past few weeks of the Corona crisis reveals some points that will need to be assessed differently in the future. "First and foremost is the demand for free space, such as balconies, porches, patios and gardens, which has risen tremendously. This is easy to understand when people are having to spend pretty much all of their time within their own four walls", says Buxbaum. The view and the orientation of the property are becoming important criteria given the current lockdown forcing people to stay indoors. The same goes for floor plans and the previous trend towards micro-apartments. "We anticipate a shift in awareness in the direction of larger apartments", explains Buxbaum.  Particularly in the case of the more expensive owner-occupied class, the demand for a suitable study and fitness area is increasing in light of the experiences of recent weeks.

Green areas are back in vogue

More thought is also being given to the apartment's location: very built-up areas, where there are few recreational or green spaces or wide roads are now, in some cases, being assessed differently than the green areas around Vienna. "Green areas are becoming very important again", says Kaspar. The micro-location is also being scrutinised in more detail, especially with regard to the availability of healthcare services. "The quality of living and the individual's well-being has assumed a new, greater importance", says Michaela Orisich, Team Leader of Residential Prime.

Price development: quality prevails

According to Otto Immobilien, prices will not generally fall - in contrast to some prophecies of doom - but the quality of a residential property will be more decisive in the future than ever before. "A south-facing apartment with a balcony and a great floor plan in a green area of Vienna will tend to increase in value, while the north-facing apartment without exterior space and a poor floor plan may not be able to maintain its price level".  Moreover, the development of prices is also very closely linked to the expected supply: This will depend, among other things, on whether many new units will enter the owner-occupied market through reclassifications or the re-conversion of existing AirBnB apartments into "regular, available" apartments. Future project developments may be postponed as the banks demand higher equity ratios. "One or two projects will certainly be reconsidered to determine whether now is the right time or whether another use could be more economically advantageous", says Buxbaum. The delays to building procedures already mentioned will also reduce the amount of building that takes place. "However, this also contrasts with one of the highest completion rates for apartments this year", says Buxbaum.

Right now, it is impossible to predict with any certainty how demand will develop. "Essentially, residential property in Vienna has been a very secure investment in recent years and over the past few decades. Now, the individual apartment parameters are being scrutinised a lot more, and our experience has also shown that this is already happening. Demand will therefore be very different", says Buxbaum. "The demand for affordable living space will increase and, as a result, decisions to buy in the near future will also most importantly depend on people's budgets", says Buxbaum. Last but not least, loans can still be obtained at favourable rates and even with the new credit rating after Corona, financing in sound conditions will presumably be available in the short term.

Vienna will be even more attractive to international buyers in future - More opportunities than risks

At the same time, there are still very wealthy and financially strong prospective buyers who will rely on secure investments. These buyers, taking the long-term view, will also increasingly come from abroad. "Vienna is a popular place to live, work and invest, and it is developing even more international appeal. It is regarded as a city that is taking the virus seriously and has it under control, and one that has a functioning healthcare system and a large number of other important and attractive qualities. The first few prospective buyers with these reasons for buying have already been in contact with us", says Buxbaum.  The two experts are accordingly optimistic: "We and our teams are very confident about the future. With our many years of expertise, we are in a strong position and believe the property market currently has more opportunities than risks", say Richard Buxbaum and Sonja Kaspar.