Increased interest rates: Interesting facts for owners and interested parties
The increased interest rates have shaken up the Austrian real estate market and caused a lot of uncertainty – for owners and prospective buyers likewise. We explain to you how the market has changed as a result of inflation and the associated interest rate increases, and what sellers and buyers must now bear in mind.
How have interest rates developed in Austria?
The development of interest rates in Europe and also in Austria was characterised by low interest rate phases for years. Thanks to attractive interest rate conditions, many prospective buyers were able to fulfil their dream of owning their own home, which meant that demand was usually significantly higher than the available supply. This could now change, as interest rates have also risen rapidly in response to inflation: At the beginning of 2022, real estate buyers had to pay an average interest rate of 0.54 per cent; in June 2023, the average rate was 3.52 per cent (source: infina.at).
Selling real estate: What you should now consider as an owner
When planning to sell their property, owners are primarily confronted with a change in buying behaviour. Since fewer and fewer people can afford a property, the overall demand has decreased – and the prospective buyers who nevertheless stick to their purchase plans negotiate more strongly in order to push down the purchase price and at least partially absorb the higher interest rates.
In addition, it is to be expected that more properties will come onto the market in the next few years because not all owners can afford the now more expensive follow-up financing. Ultimately, therefore, an increasing supply will meet a lower demand – with the result that prices will fall.
Owners should therefore not delay the sale of their property too long, but at the same time they should not rush into it. A professional valuation in the form of an expert opinion by BAMBERGER IMMOBILIEN is recommended in any case. This strengthens your own negotiating position and ensures that you do not sell your property below value.
Buying real estate: Tips for prospective buyers
Rising interest rates make loans more expensive, so that the monthly burden is correspondingly higher. At the same time, banks have stricter guidelines for financing that make it more difficult for prospective buyers to get a loan at all. Since August 1st, 2022, the following restrictions apply to the granting of real estate loans in Austria:
- the loan-to-value-ratio (i.e. the ratio of the loan amount to the market value of the property) must not exceed 90 percent
- the additional purchase costs must always be paid out of your own funds
- the monthly loan instalment may not exceed 40 percent of the net household income
- the maximum possible loan term is 35 years
These strict requirements have led to higher rejection rates for loans. If you still want to buy, you should have a very good credit rating and as much equity as possible in order to get the fairest possible loan conditions. In addition, professional advice is more important than ever when buying real estate!
Whether selling or buying: we advise you!
In view of the upheavals on the Austrian real estate market, you should by no means do without professional assistance when selling or buying. BAMBERGER IMMOBILIEN is happy to take the time for an individual consultation – just give us a call or contact us online!
Our team looks forward to your call at +43 (0) 662 42 34 20. You can also send us an e-mail at office@bamberger-immobilien.at! We are here for you and will be happy to advise you!