Central European real estate market: comparison of Germany, Austria and Switzerland

The real estate market in Central Europe, encompassing Germany, Austria, and Switzerland, is a complex and dynamic system characterized by both common trends and unique features in each country. This overview provides a detailed examination of the current state of the real estate markets in these nations, comparing housing prices and analyzing key factors influencing their dynamics.
Germany
In recent years, Germany has experienced a steady increase in housing prices, particularly in major cities. However, since June 2022, there has been a downward trend in property purchase prices. On average, the country saw a 6.4% decrease, with metropolitan areas like Berlin and Munich experiencing declines of 0.9% and 5.5%, respectively. Over the past decade, the ratio of household income to housing costs has significantly worsened, complicating the process of acquiring property for many citizens.
The average cost per square meter of housing in Germany is approximately $6,152.04 (around €5,500). In cities like Munich, prices can reach €10,900 per square meter, making it one of the most expensive real estate markets in the country.
Several factors influence price dynamics in Germany. Firstly, the country’s economic stability and low unemployment rate contribute to increased housing demand. Secondly, urbanization and population growth in major cities exert additional pressure on the real estate market. However, in recent years, rising mortgage interest rates and construction costs have led to decreased housing affordability, which, in turn, has slowed price growth.
Austria
The Austrian real estate market is experiencing a period of active growth, driven by low mortgage interest rates and high housing demand. In 2020, the cost of housing in the federal state of Vorarlberg increased by 4%, exceeding €300,000. In Bregenz, the average price rose by 6.6% to €322,538, while in Feldkirch, the average cost reached €292,068.
The average cost per square meter of housing in Austria is about $6,027.26 (approximately €5,400). In Vienna, the capital, real estate prices are higher, especially in central districts, due to strong demand and limited supply.
Factors contributing to price growth in Austria include a stable economy, attractive mortgage conditions, and a high standard of living. Additionally, the country attracts foreign investors due to its geographical location and quality of life. However, rising real estate prices raise concerns about housing affordability for local residents, particularly in major cities.
Switzerland
Switzerland is renowned for its stable real estate market. Property values in the country increase annually by 2–3%, making it attractive for long-term investments. The stability of the Swiss real estate market is among the highest in Europe.
The average cost per square meter of housing in Switzerland is approximately $12,318.20 (around €11,000), making it one of the most expensive countries in Europe in terms of real estate prices. In cities like Geneva, prices can reach €16,385 per square meter.
Factors contributing to high price levels in Switzerland include limited land availability, strict building regulations, and strong demand from both locals and foreign investors. Moreover, the country’s political and economic stability makes it an attractive destination for real estate investments.
Comparative Analysis
Comparing the real estate markets of Germany, Austria, and Switzerland reveals the following key points:
• Price Levels: Switzerland has the highest real estate prices among the countries considered, due to limited supply and high demand. Germany and Austria exhibit more moderate prices; however, significant price growth is also observed in the major cities of these countries.
• Price Dynamics: While Germany has seen a slowdown in price growth and even declines in some regions in recent years, Austria and Switzerland continue to demonstrate stable increases in property values.
• Housing Affordability: All three countries are experiencing a trend of decreasing housing affordability, linked to rising prices and a worsening ratio of income to property costs. This issue is particularly acute in major cities and economic centers.
The real estate markets of Germany, Austria, and Switzerland each possess unique characteristics and price dynamics. Switzerland stands out with high prices and market stability, while Germany and Austria display more moderate prices with upward trends, especially in major cities. Understanding these differences is crucial for potential investors and buyers considering property acquisition in Central Europe.
In the future, continued price growth in Austria and Switzerland is anticipated, although the pace may slow due to various economic factors. In Germany, the situation may stabilize; however, much will depend on the overall economic environment and housing policy.