Analyses

Prospects for the Austrian construction industry

• Adjusted for prices, construction investments have risen by 14 percent in the last thirty years, and economic output as a whole by 67 percent. 
• In the future, construction investments will flow more into renovation measures and less into new construction projects 
• Growth in the number of households and the need for new housing will weaken; residential construction in Austria is expected to fall below 50,000 dwellings per year after 2025
• Decarbonisation of the building stock requires a substantial increase in the renovation rate, which is currently hindered by high construction costs and the shortage of skilled labor 
• A contribution to resource conservation in construction is the extension of service life and the conversion of existing buildings, both measures that slow down new construction
   

as of August 2023.

• Length: 7 pages
• Language: English

Price is the problem, not interest rates

• Residential property prices in the euro area have risen significantly more than average net earnings in recent years. The affordability of residential real estate has thus declined sharply. 
• A strong reduction in the affordability of residential real estate within the euro area since the financial crisis can be seen in Luxembourg and Austria.
• Despite the high real decline in the value of incomes in Austria, housing is still relatively cheap in a European comparison.
• Despite the tightening of monetary policy since the middle of 2022, the strong increase in real estate prices is clearly the cause of the reduced affordability of residential real estate in the euro area and in Austria. Compared to 2009, the financing costs for a real equivalent property in Austria more than doubled, of which about 95 percent is due to the increase in real estate prices.
   

as of August 2023.

• Length: 8 pages
• Language: English