Austria downplays house price bubble

Vienna, Austra Photo: Herr P

The Austrian Central Bank released a statement recently saying that the country is not experiencing a housing bubble in response to soaring property prices. Indeed, real estate values in Austria have surged by 39 per cent since 2007, the highest rise in the Eurozone, reports the Austrian Times.

Leading the country's climbing prices is Vienna, with demand overseas buyers hunting for holiday homes fuelling increases in the high end of the market. Now, though, the country's bank has stepped in to reassure any concerns that price rises could be getting out of hand.

"The risk to financial stability from increasing real estate prices is gauged to be low," said an official statement.

The comments follow a similar move in Germany, where rising prices have sparked fears of a bubble, and in the UK too, where London's rocketing property values have outstripped the rest of the country, prompting professionals to call for an end to government-assisted lending schemes.

One possible cause of Austria's price increase is cited as the European Central Bank, whose low rates have made lending more affordable for buyers, encouraging demand.

While the bank has dismissed fears of a bubble, though, it has also announced that it will create a new fundamental price indicator to monitor the situation closely.