Despite sustained growth in residential construction completions over the past two years, Austria is experiencing an alarming decline in housing construction. This trend starkly contrasts with the positive developments in previous years, during which the number of construction completions increased by 3.6%, even as building permits declined by 22%. An analysis by Interconnection Consulting for the period 2018-2021 reveals that 13% of construction projects in the residential sector were left unfinished. The slight increase in construction numbers in 2022 is mainly attributed to postponed projects from the previous year. However, Interconnection Consulting predicts a crash in construction completions of 17.4% in 2023 due to a drastic decrease in building permits by 27.3%, rising interest rates, high inflation, and declining real wages.

2023: Less than 50,000 completed dwellings

The total number of completed dwellings in 2022 was 60,377, as indicated by Interconnection’s regional study analyzing housing construction at the district level. For 2023, it is anticipated that this number will decrease to 49,873. None of the federal states are exempt from this decline, with Burgenland (-27.7%) and Vorarlberg (-26.7%) particularly affected by a significant drop. The decline in Burgenland is concerning: population outflow leads to an oversupply of housing and, consequently, a decrease in construction activity. From 2018-2022, Vorarlberg had the highest completion rate. However, in 2023, this region will not have as many outstanding building permits as in other federal states.

Boom District and Flop District: Eisenstadt surprises, Zwettl disappoints

Eisenstadt, with the highest growth in housing construction at 50.6%, surprises as a boom district, despite no construction boom elsewhere in Burgenland. The proximity to Vienna plays a crucial role, making Eisenstadt now attractive to commuters. In contrast, a decline of over 59% in housing completions is expected in Zwettl, following strong growth in 2022.

Multistory residential construction on the rise

In a heavily urbanized country like Austria, there is a clear trend towards multistory construction. In 2023, 72% of all completions will be in multistory residential construction. Graz and the Vienna districts of Donaustadt, Floridsdorf, Favoriten, and Liesing are the districts with the highest construction activity in housing, contributing to nearly 26% of Austria’s total residential construction activity.

Prefabricated houses in Lower Austria continue to trend

The sector of single-family homes represents more than a third of all completed housing units in Austria. Lower Austria dominates with over 1.600 units ahead of Upper Austria. The market share of prefabricated houses is higher in the east (over 40%) than in the western federal states, supported by lower land prices and the strong presence of leading manufacturers such as Wolf, Genböck, Haas, Hartl, and Elk.

28/11/2023

Copyright: Interconnection, Publication free of charge for coverage regarding the study and InterConnection Consulting.