Amid the coronavirus pandemic, European residential property markets face new challenges(, Vienna)
In the second quarter of 2020, residential property prices accelerated markedly throughout Austria
According to the most recent property market review of the Oesterreichische Nationalbank (OeNB), residential property prices in Austria accelerated notably year on year in the second quarter of 2020, both in Vienna (Q2 20: 4.1%, Q1 20: 3.9%) and even more so in Austria excluding Vienna (Q2 20: 6.8%, Q1 20: 2.8%). Residential property prices in Central, Eastern and Southeastern Europe (CESEE), for which data were only available up to the first quarter of 2020, likewise posted dynamic growth rates above the EU average. In this region, the coronavirus (COVID-19) pandemic seems to have been weighing on housing demand, however. A similar picture is emerging in the rest of the EU.
Austria shows no letup in demand for residential property
Both in Vienna and even more so in Austria excluding Vienna, residential property prices increased noticeably in the second quarter of 2020. Price growth, having started to slow down in mid-2019, is therefore again on a par with values last seen in the first half of 2019. The second-quarter price increase recorded in Vienna amounted to 4.1% year on year and to 2.4% quarter on quarter. Residential property prices in Austria excluding Vienna rose by a strong 6.8% year on year in the second quarter of 2020 (Q1 20: 2.8%) and by 3.8% against the previous quarter. Compared with pre-pandemic times, demand for housing remained more or less unchanged across the various price segments, with second-quarter residential property sales at both the low and the high end showing no letup.
The overall pickup in prices in Austria excluding Vienna was above all due to the tripling of single family house prices in the second quarter (+10.6% year on year, after 3.3% in the first quarter). Also in Vienna, single family homes continued to record substantial year-on-year price increases; after having gained 10.4% in the first quarter of this year, the growth rate notched up to 11.7% in the second quarter. This development may be connected to the increasing popularity of country living, as COVID-19 has left its mark on everyday life, with more and more people working from home, practicing physical distancing and having been cooped up at home during lockdowns. The coming months will show whether this trend is here to stay.
|Q2 20||Q1 20||Q4 19||Q3 19||Q2 19||2019||2018||2017||2016||2015||2014|
|Annual change in %|
|Austria excl. Vienna||6.8||2.8||1.2||1.7||3.6||2.6||8.5||4.9||9.1||5.1||3.1|
|Quarterly change in %|
|Austria excl. Vienna||3.8||1.5||0.6||0.8||0.0||x||x||x||x||x||x|
|Austria excl. Vienna||206.9||199.3||196.3||195.2||193.7||194.8||189.8||174.9||166.7||152.9||145.4|
|Source: Data Science Service GmbH (DSS), Vienna University of Technology, Prof. Feilmayr, OeNB.|
CESEE residential property posts dynamic growth up to COVID-19 outbreak
In CESEE, residential property markets were seeing a fairly robust upswing when the coronavirus hit. According to Eurostat data, residential property prices continued to record brisk growth well above the EU average in almost all CESEE countries (excluding Hungary), with both housing loans and construction going strong on average. Yet, preliminary data indicate that the coronavirus pandemic has been weighing on housing demand, particularly in light of lower income levels, deteriorating labor market conditions and increased uncertainty for households. Central banks and governments in the CESEE region have taken comprehensive measures to cushion the short-term effects of the crisis, and these measures are also meant to support the residential property markets. Overall, households and banks are said to be more resilient compared with the 2008/2009 financial market crisis. Nevertheless, the COVID-19 pandemic proves very challenging for residential property markets in CESEE.
Up to COVID-19, housing prices also rose in most other EU countries
In the rest of the EU (excluding CESEE and Austria), property prices mostly accelerated markedly in the first quarter of 2020, up to the outbreak of the coronavirus pandemic to be precise. Particularly high price growth well above the EU average was registered in Germany, Luxembourg, Sweden, Portugal and Malta. Below-average increases were seen in Finland, Spain, France and Cyprus, with Italy still coming out as a clear laggard. As consumer sentiment decreased overall and uncertainty increased amid COVID-19, demand for new housing loans dropped notably. On the supply side, the construction industry, like most other industries, had to scale back activities starting in mid-March, but quickly went back to business when lockdowns were lifted.
 Eurostat’s housing price statistics cover the first quarter of 2020.