Property prices ‘will continue to rise’

A real estate manager has said he expects Viennese property prices to climb further.

Johannes Meran, who heads the administration board of Vienna-based property developer Conwert Immobilien Invest AG (Conwert), told the Kurier newspaper today (Mon): “I think the price for owner-occupied apartments in Vienna will continue to rise. Increases of five to 10 per cent are possible.”

Meran added his company saw no indicators for contrary developments. The average price for owner-occupied apartments in the Austrian capital shot up in recent years as more and more people considered real estate as a safe but also profitable investment. Flat rents jumped over the years as well, new figures show.

Meran said his company may sell real estate worth 500 million Euros this year. He revealed that Conwert wanted to concentrate on Germany in the coming years. “We have been closely observing Germany for a long time, especially Berlin, Dresden and Leipzig,” the businessman said. Meran added that smaller cities in Germany had Conwert’s attention too.

“We want to keep growing in Germany. (…) Berlin’s property sector is booming,” the Conwert administration board boss told the Kurier. Meran made clear he expected more difficulties concerning financing his firm’s activities due to stricter capital ratio regulations for banks. However, the Conwert manager also pointed out that his enterprise did not experience troubles as far as this issue was concerned to that day.

Meanwhile, the Austrian Labour Chamber (AK) attacked real estate agents over extraordinary price hikes. AK said last week rents for apartments in Austria shot up by 34.5 per cent between 2001 and 2010. The organisation pointed out that the domestic inflation rose by only 21 per cent during the same period. AK said real estate dealers must stop charging provisions and higher rents for flats because of their excellent location. The chamber added that Austrians’ salaries had risen by 22 per cent on average since 2000.

The Austrian Association of Real Estate Agents hit back, saying that property dealers were kept from issuing inappropriate rent increases by federal law. The association said rents could not rise more strongly than inflation. It claimed apartment rents climbed beyond the inflation rate “due to extensive renovation and restoration” commissioned by property owners and landlords. The Association of Real Estate Agents in Austria accused AK of “trying to cause panic” among people.

It has to be seen whether upcoming tax increases will affect Austrians’ focus on snatching up properties. The government coalition of Social Democrats (SPÖ) and the People’s Party (ÖVP) is reportedly about to introduce a tax on profits made by selling real estate. The measure could come into force as part of the next savings package. SPÖ and ÖVP minister are in the final stage of discussing details of the cost reduction and efficiency campaign which will also include several tax hikes and even some new taxation measures, according to reports.