Expert Talk: Austrian Real Estate Market Outlook for 2025

In 2025, the Austrian real estate market continues to navigate a period of adjustment. With shifting economic conditions, evolving regulations, and growing ESG priorities, investors and buyers are closely watching the trends that will shape the year ahead. To gain deeper insights into these developments, we sat down with Igor Strehl, founder and owner of Dunaj Consulting, to discuss key market dynamics and his recommendations for stakeholders in the real estate sector.

Hi Igor! What’s your take on the current state of the Austrian real estate market?

Igor Strehl: Hello! 2024 was a challenging year with housing prices dropping by -2.20% across Austria and -3.50% in Vienna. However, as we move into 2025, stabilizing inflation and decreasing interest rates are creating a cautiously optimistic outlook for the real estate sector.

How will these economic shifts impact residential property demand?

Igor Strehl: The European Central Bank's plan to ease interest rates in 2025 will certainly reduce the credit burden on individuals. Additionally, the expiration of the KIM Regulations mid-year could make financing easier, especially for middle-income families and young buyers. However, Austria’s economic growth remains modest, and external pressures, like rising U.S. tariffs, may continue to weigh on demand.

What about the supply side in residential real estate?

Igor Strehl: We’ve seen a significant decline in new housing permits—a 27% drop in 2023 compared to 2022 and a further 17.9% decrease in Q2 2024. This cautious approach by developers could actually benefit the market by preventing oversupply and stabilizing prices.

Let's shift to the commercial side. How is the office market performing?

Igor Strehl: Vienna’s office market remains strong, with the vacancy rate dropping to a historical low of 3.3% in 2024. The demand for ESG-compliant office spaces is robust, driven by both corporate sustainability goals and stricter EU regulations. This trend extends beyond Vienna to regional hubs like Graz, Linz, and Salzburg, where modern, sustainable office spaces are seeing rising rents.

What major trends should we keep an eye on for 2025?

Igor Strehl: Easing financing conditions will likely boost residential demand, especially among middle-income buyers. However, regional disparities will persist—premium areas like Vienna’s first district may continue to see price stability or even growth, while cities like Linz and Innsbruck could face further price drops. For commercial real estate, ESG compliance is becoming a non-negotiable, driving demand for green-certified office spaces.

What’s your advice for residential buyers and office space investors in 2025?

Igor Strehl: For residential buyers, the easing of financing conditions and recent price adjustments could create attractive opportunities, especially in areas with strong rental demand or stable prices. For office space investors, focusing on modern, ESG-certified properties will offer a competitive edge. Regional hubs like Graz and Linz present cost-effective alternatives to Vienna, with strong growth potential.

The Austrian real estate market is in a phase of adjustment, and while there are opportunities, vigilance is key. Whether in residential or commercial sectors, focusing on sustainable, high-quality assets will be crucial for navigating 2025 successfully.