Mixed impact of COVID-19 pandemic on EU residential property markets(, Vienna)
In Austria, residential property prices increased further in the fourth quarter of 2020
For its latest international property market review, the Oesterreichische Nationalbank (OeNB) looked into how real estate markets have responded to the COVID-19 pandemic, both in Austria and in other EU countries. In Austria, prices of residential property continued their uptrend in the fourth quarter of 2020 year on year. The data for Central, Eastern and Southeastern European (CESEE) countries, which were available up to the third quarter, show high, yet reduced rates of growth, coupled with continued favorable financing conditions. In most other EU member states, real estate prices continued to grow markedly. Construction recovered, at least partially, both in CESEE and in the rest of the EU.
Prices of Austrian real estate – above all of single-family homes – grew at a faster pace in 2020 than in 2019
The uptrend of prices observed in Austria’s property market in 2020 continued into the fourth quarter. While the strong price increase of property prices in Vienna remained unchanged in the fourth quarter of 2020 (+9.4% year on year), price growth in the rest of Austria accelerated further (+10.7% year on year) against the third quarter (+9.7% year on year). In Austria as a whole, residential property prices rose by 10.0% on the year in the fourth quarter of 2020, following a year-on-year increase of 9.5% in the third quarter. The uptick was above all due to the increase in prices of single-family homes. With people increasingly working from home amid the COVID-19 pandemic, demand for living outside big cities and/or in houses with a garden seems to have risen. Quarter on quarter, price growth of property prices slowed down somewhat recently. Having picked up by some 3% both in the second and in the third quarter of 2020, prices increased by 1% in the final three months of the year. The OeNB’s fundamentals indicator for residential property prices in Austria hence went up further in the fourth quarter of 2020.
|Q4 20||Q3 20||Q2 20||Q1 20||Q4 19||Q3 19||Q2 19||2020||2019||2018||2017|
|Annual change in %|
|Austria excl. Vienna||10.7||9.7||6.8||2.8||1.2||1.7||3.6||7.5||2.6||8.5||4.9|
|Quarterly change in %|
|Austria excl. Vienna||1.5||3.5||3.8||1.5||0.6||0.8||0.0||x||x||x||x|
|Austria excl. Vienna||217.2||214.1||206.9||199.3||196.3||195.2||193.7||209.4||194.8||189.8||174.9|
|Source: Data Science Service GmbH (DSS), Vienna University of Technology, Prof. Feilmayr, OeNB.|
Price increase of residential property in CESEE decelerated but still high
In the Central, Eastern and Southeastern European EU member states, the GDP-weighted increase of residential property prices decelerated year on year because of the COVID-19 recession, but it remained high and notably above the EU average. Since the coronavirus outbreak, consumer confidence sank well below pre-pandemic levels, and both economic growth and unemployment worsened. The conditions for taking out housing loans remained favorable, however. Having slowed markedly since the onset of the crisis, construction activity recovered only partially until year-end. Business confidence in the construction industry at end-2020 clearly undershot pre-crisis levels. Thus, the COVID-19 crisis hit residential property markets through both demand and supply channels. To date, comprehensive support measures have helped cushion the fallout of the COVID-19 pandemic on the sector, however.
Residential property prices continued to increase in most other EU member states
In most other EU member states1, property price growth remained dynamic in the third quarter of 2020, despite the COVID-19 pandemic. Affordability of residential property had worsened in part significantly above all in the second quarter of 2020. New housing loans had declined notably following the COVID-19 outbreak, but their growth rate gradually became positive again starting from May 2020. In the spring of 2020, both construction activity and confidence in the construction industry had fallen to record lows except in Germany, but from early summer onward, some of the other EU member states saw a fast recovery.
1)EU member states excluding Austria and CESEE.