UniCredit Bank Austria Analysis
The affordability of home ownership improved in 2025 for the third consecutive year
- Following the decline in residential property prices in 2023 and 2024, property prices rose slightly in 2025
- Thanks to a rise in net incomes of over 3.5 per cent, the affordability of residential property improved for the third consecutive year in 2025, despite residential property prices rising by 2.6 per cent
- However, compared to 2010, affordability – that is, the ratio of net income to property prices in Austria – has deteriorated by 20 per cent
- Affordability has fallen in all federal states in a long-term comparison, but regional disparities have increased
- As a result of the long-term decline in affordability, demand for rental properties has risen, triggering a rise in rents above the rate of inflation. This trend is set to continue in the coming years
- A further rise in property prices is expected in 2026/27, roughly in line with general inflation
“After two years of falling residential property prices by a total of more than 3 per cent, a turnaround occurred in 2025,” says UniCredit Bank Austria Chief Economist Stefan Bruckbauer, adding: “Despite a slight rise in residential property prices, affordability improved again in 2025 due to stronger income growth. Since 2022, affordability – measured by the ratio of net income to property prices – has increased by more than a fifth.”
Property prices are rising again
Boosted by lower financing costs, residential property prices stabilised in the first half of 2025 and began to rise in the second half of the year. Following a decline in property prices of 3.2 per cent in total in 2023 and 2024, according to the House Price Index (HPI) from Statistics Austria, prices rose by an average of 2.6 per cent in 2025.
“Despite the turnaround in the trend, residential property is currently still cheaper than in 2022. According to our estimates, the average price per square metre for flats in Austria in 2025 was approximately €4,100 and for single-family homes just under €2,800. This represents a saving of around €250 and approximately €120 per square metre respectively compared to 2022,” says UniCredit Bank Austria economist Walter Pudschedl.
However, a long-term comparison paints a different picture. Since 2010, residential property prices have risen significantly. The European Central Bank’s zero-interest-rate policy, reinforced by unconventional measures such as various asset purchase programmes, has, on the one hand, created particularly favourable financing conditions and, on the other, made investment in residential property particularly attractive. Demand has also been bolstered by high housing demand resulting from strong population growth.
“On average, residential property prices in Austria more than doubled between 2010 and 2025. Property prices rose by 116 per cent during this period. Whilst the price per square metre for detached houses doubled, the price per square metre for flats actually rose by 120 per cent,” said Pudschedl.
Affordability of residential property improved in 2025 despite rising prices
The average net income of an employee in Austria has risen by a total of 20 per cent since 2022. As a result, the affordability of residential property has increased significantly during this period. In 2022, the average annual net income was sufficient to purchase 7 square metres of living space (weighted average of owner-occupied houses and flats). By 2025, the average annual income could finance as much as 8.8 square metres of living space, with slightly more for single-family homes and slightly less for flats due to differing price trends.
“The ratio of net income to property prices has improved by more than 20 per cent over the past three years. As property prices have more than doubled from 2010 to the present day, whilst the average net income in Austria has risen by ‘only’ 73 per cent, the real value of an annual income relative to the price trends of residential property over the past fifteen years has, by contrast, fallen by around 25 per cent,” says Pudschedl, adding: “Whereas in 2010 an Austrian net annual income could finance 10 square metres, by 2025 it was only enough to finance around 8 square metres of a flat or 11.8 square metres of an average single-family home. In 2010, it could still finance 13.5 square metres of a single-family home.”
Or to put it another way: in 2025, a household had to spend 12.5 years’ income on a 100-square-metre flat, and 8.5 years’ income on a 100-square-metre house. In 2010, the figures were just 10 and 7.4 years’ income respectively. In 2022, however, the figures had risen to 16 and over 10.5 annual salaries respectively.
Affordability of residential property is lowest in Vienna and the west, highest in Burgenland and Styria
“The affordability of property, measured by income growth relative to price growth, depends heavily on the property’s location. Whilst income differences within Austria are small, price differences for property across the individual federal states are very high,” says Pudschedl.
The highest annual net income of all federal states in 2025 was recorded in Lower Austria at just under €35,000, or 106.8 per cent of the Austrian average. In contrast, a detached house cost only 91 per cent and a flat just 73 per cent of the Austrian average per square metre. The situation in Burgenland is particularly favourable, with an annual net income of 106.5 per cent of the Austrian average and the lowest residential property prices compared to the Austrian average of just 65.1 per cent for detached houses and 47.6 per cent for flats. At the other end of the spectrum lies the federal capital, Vienna, with a net income of 96.5 per cent of the Austrian average and the highest property prices at 198 per cent of the national average for houses and 123 per cent for flats.
“In a ranking of residential property affordability, the purchase of a detached house in Burgenland tops the list. If one compares the average annual net income of a Burgenland employee with residential property prices, an average of just 5.2 times the annual net income would be required for 100 square metres of living space in 2025. At the other end of the affordability spectrum is the purchase of a detached house in Vienna. For 100 square metres, as many as 17.4 times the average annual net income in Vienna was required,” said Pudschedl.
Over the past three years, there has been a positive trend in the affordability of detached houses across all federal states. In particular, Vorarlberg, Salzburg, Tyrol and Vienna have seen a significant increase in affordability. Currently, in each of these four federal states, less than four times the annual income is required for 100 square metres compared to 2022. However, in a long-term comparison, affordability is lower in all federal states than in 2010. The trend in Tyrol stands out particularly negatively, with a drastic reduction in affordability. On average, it currently takes more than 5 times the annual income to purchase a detached house with a living area of 100 square metres than it did in 2010. The average increase across Austria was just 1.1 times the annual net income.
Affordability of owner-occupied flats has also improved across all federal states over the past three years. On average across the country, the number of net annual incomes required to purchase a 100-square-metre property fell by 3.4. An above-average improvement was seen in Vienna, Tyrol, Vorarlberg and Carinthia, albeit partly starting from particularly high levels. In 2022, for instance, around 20 annual incomes were required in Vienna, Tyrol and Vorarlberg to purchase a 100-square-metre flat.
As the only federal state comprising a city, the results for Vienna are only partially comparable with developments in the other federal states. Within the individual federal states, too, there are significant differences between urban and rural regions, which are scarcely reflected in the state averages. Thus, there are marked regional differences, particularly in federal states with larger conurbations, such as Styria with Graz, Upper Austria with Linz, Salzburg with the city of Salzburg and Tyrol with Innsbruck.
Rents continue to rise
“Whilst the affordability of home ownership has increased since 2022, the affordability of rental properties has fallen significantly. Rents have risen by an average of 20 per cent over the past three years, whilst residential property prices have fallen slightly over the same period. However, as net incomes have also risen by an average of around 20 per cent since 2022, the relative affordability of rental properties, measured against income trends, has not changed on average since then,” says Pudschedl.
However, there has been significantly greater momentum in new lettings compared to existing rents, suggesting a reduction in affordability relative to income growth in this sector. This trend is expected to continue due to the long-term decline in the affordability of home ownership for broad sections of the population , and high demand is likely to drive a rise in rents above consumer price inflation in the coming years as well.
Stabilisation of property price trends
For 2026 and 2027, we anticipate property prices will continue to rise at a rate roughly in line with general inflation of between two and three per cent. On the one hand, prices for new-build properties are expected to rise further. The recent energy-price-driven inflation shock caused by the war in Iran will increase material costs and, with a slight delay, labour costs as well. As a result, construction costs and prices, which have hardly changed over the past two years, will once again show an upward trend. Secondly, a at least slight increase in demand for second-hand and generally more affordable owner-occupied housing is expected in the coming years.
“The rise in property prices in the coming years, driven by demand and costs, will also be fuelled by a tight supply, resulting from low completion rates following the slump in building permits from 2022 onwards. Despite possible key interest rate hikes by the ECB in response to the consequences of the Iran conflict, financing conditions will remain favourable, which is likely to bolster the purchase of residential property for investment purposes as well, especially as persistently high rental price growth driven by demand promises attractive returns from letting,” concludes Bruckbauer.
Further information in our analysis: Normalisation in the residential property market, UniCredit Bank Austria, May 2026.
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Phone: +43 (0) 50505-41957;
Email: walter.pudschedl@unicreditgroup.at