OeNB to start publishing quarterly property market reviews

(, Vienna)

“Austrian Property Market Review” Q4/2018 online (in German)

The Oesterreichische Nationalbank (OeNB) has been monitoring developments in the Austrian real estate market for years, given its mandate to ensure price stability and financial stability and the key role that asset prices play in driving inflation. Starting with the fourth quarter of 2018, the OeNB's expertise in this field will be made publicly available with a new quarterly “Property Market Review” (available in German only). Two issues will be dedicated to international property market trends – in particular in Central, Eastern and Southeastern Europe (CESEE) – that may have implications for financial stability in Austria, while the other two issues will focus on the Austrian property market.

Developments in property markets have an impact on how well the central bank’s targets of safeguarding price and financial stability can be met. Against this backdrop, the OeNB has widened its monitoring activities to include the property market and is now launching a new online quarterly that reviews developments in residential property markets that may have implications for price stability and financial stability. “International Property Market Reviews” to be published in the first and third quarter of each year will look in particular at how developments in CESEE countries may affect Austria. “Austrian Property Market Reviews” to be published in the second and fourth quarter of each year will cover the domestic residential property market and real estate financing.

Each issue features harmonized time series for CESEE and the euro area in a comparison with Austria as well as data on the Austrian property market. The data are provided in PDF format and as MS Excel files.

Marked rise in residential property prices in early 2018

In Austria as a whole, property prices rose by 5.0% on the year in the second quarter of 2018, following a year-on-year increase of 7.3% in the first quarter. The slowdown in property price growth was driven by the “Austria excluding Vienna” aggregate, where growth decelerated to 6% in the second quarter of 2018 from 10% in the first quarter. Running counter to this trend, property prices in Vienna were found to have gone up by 4.2% in the second quarter, following 3.5% growth in the first quarter.

Residential property prices in Austria  
  Q2 18 Q1 18 Q4 17 Q3 17 2017 2016 2015 2014 2013
Annual change in %
Austria  5,0  7,3  4,7  4,5  3,8  7,3  4,1  3,5  4,7
Austria excl. Vienna  6,0  10,0  7,3  4,5  4,9  9,1  5,1  3,1  2,7
Vienna  4,2  3,5  0,3  3,4  1,5  3,8  2,2  4,2  8,7
Quarterly change in %
Austria  0,6  3,8  0,6  –0,1   x   x   x   x   x
Austria excl. Vienna  0,5  4,1  2,1  –0,8   x   x   x   x   x
Vienna  0,7  3,5  –0,7  0,7   x   x   x   x   x
Index (2000=100
Austria  197,6  196,4  189,3  188,2  187,2  180,4  168,1  161,4  156,0
Austria excl. Vienna  187,1  186,2  178,8  175,0  174,9  166,7  152,9  145,4  141,1
Vienna  229,4  227,7  220,1  221,6  220,4  217,2  209,2  204,6  196,3

Slight increase in potential overvaluation of residential property prices

In the second quarter of 2018, the OeNB fundamentals indicator for residential property prices pointed toward a slight quarter-on-quarter increase in the potential overvaluation of properties in Vienna, to 21.4% (Q1 2018: 21.0%). For Austria as a whole, the indicator measured 11.1% in the second quarter, which also corresponds to an increase on the previous quarter.

Residential property market expanding

Residential construction investment as measured by national accounts data increased at a rather moderate rate in the first half of 2018. However, the fast growth in both building construction as well as the number of building permits suggests that the residential housing market remains strong.

Stable growth in residential housing loans

Growth of housing loans to households has been largely stable during 2018, with year-on-year growth of 4.1% in September 2018. Conditions for taking out housing loans, in terms of credit standards and lending conditions, have remained favorable. Foreign currency loans as a share of outstanding residential housing loans decreased by 2.4 percentage points, to 12.3%, in the past 12 months. The share of variable rate loans in new lending, while having dropped to 42.9% during the first 8 months of 2018 from 53.1% for the corresponding period of 2017, remains very high by international standards and indicates that households have accumulated a substantial amount of interest rate risk.