Real estate prices have fallen since the end of the long-term boom, even though supply is scarce. But according to a study by the Volksbanken and Raiffeisenbanken (BVR), this could soon change.
The current real estate forecast of the cooperative financial group BVR predicts a slight increase in prices of one percent for the first time in 2025. “We see that prices are slowly stabilizing and are not falling any further, especially because the shortage of housing continues to increase,” says BVR President Marija Kolak.
The New housing construction needs to be stimulated again urgently, demands Kolak. This requires better funding, simpler building and planning regulations and reduced property transfer taxes for owner-occupiers.
According to the analysis, prices for houses and apartments fell by an average of 4.5 percent last year. The metropolitan areas, which had previously experienced strong increases, were particularly affected.
The fall in prices was triggered by high inflation following the attack on Ukraine and the subsequent interest rate increases by the European Central Bank. Fewer and fewer people could afford to own their own property and demand collapsed.
This also slows down the urgently needed energy-saving renovations in existing buildings, because renovations often involve a change of ownership.
▶︎ The Volksbanken and Raiffeisenbanken expect a slow recovery of the market from 2025 onwards.
If inflation continues to fall as expected and the ECB continues to ease its monetary policy, the fundamental demand for property assert themselves again – albeit with a much more subdued dynamic compared to the boom years.