Austria’s national bank says property in Vienna in the first quarter of this year is probably about 22 percent overvalued. And the bank also noted that despite the fact that the property was overvalued, prices had increased in the first quarter by 8.1 percent.
It is part of an almost unbroken trend that has seen the price of property in the Austrian capital double since 2005, and when looking at the whole country has seen property prices rise by a third.
The statistics were compiled from figures held by the Austrian national bank and the Vienna University of Technology. The one-off study project that looked at the basic price indicators across the country estimated that while in Vienna there was an overvaluation of around 22 percent of what the property was really worth, in the rest of the country property was generally undervalued by about eight percent.
The National bank said that while excessive prices were being charged in Vienna, that was generally in line with what was going on in other main European cities according to the National bank’s chief economist Doris Ritzberger-Grünwald.
The increase in value this year of property in Vienna of 8.1 percent compares with an increase last year in the first quarter of the year of 11.4 percent. Outside of Vienna the price increase was around 2.2 percent compared with 1.9 percent in the first quarter of 2013.
The Austrian national bank warned that the price rise was not an indication that the was going to be a property bubble that soon burst. They said other factors were at play including demographic factors influencing demand, the general wealth of the population and the availability of land and property.
The national bank looked at the situation in other countries for example the Netherlands where in the capital there was a 26 percent overvaluation that later corrected itself with an 18 percent drop in prices. Ireland had been the most significant overvaluation of property values around 45 percent over what they were really worth and in Spain it had been 30 percent. The price correction in Ireland had seen the falling value of 46 percent, and in Spain a fall of 37 percent.
But in Vienna prices are being driven up by Russian, German and Arabic investors who are particularly interested in snapping up luxury property.
According to a study by the British real estate agents Frank Knight the lure of purchasing a villa or similar luxury property in the capital would probably mean around 483 super rich people would be living in the city by 2023. That would be an increase of 26 percent on the current level of superrich. According to the estate agents a superrich person is somebody who has more than 22 million EUR.
Only London and Dublin saw higher price increases than the Austrian capital in the last year as a result of luxury property purchases fuelling the price rise.