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Real estate consultancy EHL expects that a significantly lower supply of new rental apartments will likely lead to further rent increases this year, according to a press release on Monday. The number of completed rental apartments was already down by a quarter year-on-year in 2024, and the trend is likely to intensify significantly again this year. In contrast, falling interest rates lead to cheaper loans and boost condominium demand.
In 2024, around 4,200 rental apartments across Austria were newly completed; for 2025, EHL expects only 1,800 new apartments. “This development marks the sharpest slump in the last decade and puts further pressure on the rental housing market,” the real estate consultant says in the press release. According to EHL, the slowdown in new construction activity is due to the bleak economic situation in the construction industry and the extensive building regulations and bureaucracy.
Rental development is likely to significantly exceed inflation in the coming years
The falling supply and high demand had already led to an average rent increase of around 6.2 to 7.7 percent in the previous year, 2024, depending on location, features, and size. According to EHL, this trend will likely continue in the coming years, with the real estate consultant anticipating a development well above the inflation rate.
In the property sector, on the other hand, the interest rate cuts by the European Central Bank (ECB) and the expiry of the KIM regulation would bring more attractive financing conditions and stimulate demand. Nevertheless, supply is also limited here, with around 4,600 new condominiums going on sale in 2024 and EHL expecting a similar level in 2025.
- source: APA/picture: Image by Oleksandr Pidvalnyi from Pixabay
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