Austria may abolish property purchase tax for some consumers
The Austrian government wants to abolish the property purchase tax, which is 3.5% of the home’s value. Only people buying their first property will be exempt from the rate. It is necessary to prepay 10% of the deal to buy a home in the country. In addition, the buyer must be prepared to pay property tax, bank charges, and realtor fees – 3% of the transaction amount. Thus, the purchase price may increase by about 10%.
The abolition of the tax is explained by the decision to make the purchase of housing more affordable for young people. Property prices in Austria have been rising for several years. In 2022, increased interest rates and stricter mortgage payment rules exacerbated the situation. As a result, buying a home has become unaffordable for many people, which has impacted sales in the sector.
Experts from the Austrian Real Estate Association note that the value of properties in the country has increased steadily for ten years, and in 2023 it reached its peak. However, we should not expect prices to fall; we are discussing a slowdown in development dynamics. Throughout 2023, a price increase of 5% is predicted.
Will the property purchase tax affect the real estate market in Austria
At the beginning of the period, there was a decline in demand, with interest falling primarily in the real estate sector of 500 thousand euros and more. Experts point to the tightening of lending rules adopted by banks in August 2022 as the main factor behind this trend. The situation has been exacerbated by rising inflation and energy prices.
Despite some decline, analysts expect demand to increase in the medium term. Real estate is considered one of the most secure investment options. Buyers will get used to the interest rates after a while, and their interest will rise again. The pricing of Austrian real estate is affected by several factors due to the country’s landscape and the global rise in the cost of building materials. As a result, the price per square meter in a new building cannot be lower than €6,800.
Experts note that property prices in Vienna have been rising regularly since 1993. It should be expected that this market will continue to grow significantly in the near future. As history shows, even severe crises could not weaken the dynamics. Furthermore, realtors see increased supply in the capital market and across Austria. This means that sellers have changed their wait-and-see tactics and are willing to transact at current prices.