Paddle boarding and boating on Lady Bird lake in downtown Austin
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In the back garden of Vince Hannemann’s house in south Austin is the city’s strangest landmark: the Cathedral of Junk. Made from more than 60 tons of rubbish — scrap metal, street signs, old shoes, a prosthetic limb — the cathedral has been a leading symbol of the “Keep Austin Weird” movement.

“That whole movement was kind of a reaction against the increasingly homogenised nature of cities in the US,” says J Kuper, general manager at Kuper Sotheby’s International Realty, “and Austin isn’t like that — it’s still a very diverse city.”

Aside from the cathedral, further examples of weirdness abound. Austin is home to perhaps the world’s only Museum of Natural and Artificial Ephemerata, and this weekend will host Eeyore’s Birthday Party, a free outdoor festival famous for its colourful costumes, impromptu drum circles and wafts of marijuana smoke.

“If you walk downtown in Austin today,” says Kuper, “you could see a guy riding a bike in his Speedos and then right across the street you’ll see a businessman in a tailored suit . . . People buy into that.”

The weird nature of Austin is just one of the factors that have placed this small Texan city of about 885,000 inhabitants at the top of Savills’ new Tech City rankings, beating San Francisco, New York and London. “It’s a quirky place,” says Paul Tostevin of Savills Research, “and that counter-culture atmosphere is part of its appeal.”

Tostevin’s team rated 12 global cities with growing tech sectors using key metrics based on the local business environment, the cost of living, the local talent pool and the quality of life.

“When we ran all the stats, Austin came out top,” he says, “which might surprise a lot of people, but actually it stacks up very well as it’s a small city that offers a lot for young, educated people who are [seeking] an interesting living environment.”

In the past few years, major tech groups such as Google, Apple, Facebook and Electronic Arts have all opened, or announced, centres in Austin, drawn in by the relatively low real estate costs and, thanks to the tech courses offered by the University of Texas at Austin, an abundance of local talent. It is an influx that, according to Kuper, is helping drive the largest rise in house prices in recent memory. “The housing market has been on fire for the past 12 to 18 months,” he says, calculating that prices are up 11 per cent on last year. “Five years ago there was almost no growth in Austin,” he says. “We had a steady four years of 3 to 4 per cent, and then a big spike starting in about 2013.”

Gains have been made across the board, adds Kuper, but properties priced between $800,000 and $1.2m are really flying. “There is virtually no inventory [at that price bracket]. Properties stay on the market for not weeks or days, but more like hours.”

One of the few properties available in this range is a two-bedroom apartment in downtown Austin for $1.08m being marketed by Moreland Properties, an affiliate of Christie’s International Real Estate. Moreland is also selling a three-bedroom apartment, still under construction, in the Fifth and West Residences — also downtown — for $2.42m

Two-bedroom apartment in downtown Austin, $1.08m

The construction work in this part of the city has had to keep up with demand. “If you were in downtown Austin today,” says Kuper, “you would see eight or nine tower cranes, and the majority of those are working on residential condos.”

According to Jim Olenbush, owner of austinrealestate.com, the most desirable parts of the city are to the west along the Colorado river and the city’s Central area where he is selling a five-bedroom home on Rainbow Bend for $2.29m. In West Lake Hills, Kuper Sotheby’s is marketing a five-bedroom home with wooden-beam ceilings for $3.37m.

The tech sector is far from being the only show in town. Recent years have seen gains in the oil and gas sectors, the arrival of the Formula 1 crowd after the opening of the Circuit of the Americas in 2012 and, since 1987, the city has hosted South by Southwest, the film, music and digital festival that has been credited with launching Twitter and Foursquare into the mainstream.

According to Tostevin, the relatively cheap living costs — there is no personal income tax in Texas — cannot be overstated. Analysing what he calls the “live-work cost”, Tostevin’s team looked at the rental and living costs that a young tech employee might incur in Austin and how much it would cost their company to put them in an office. “It came out at something like 35 per cent less than San Francisco and 32 per cent less than New York,” he says.

However, with rocketing house prices and a rapidly rising population — due to increase 30 per cent over the next 15 years according to the Urban Institute — will Austin still be top of the tech cities in five years’ time?

“There are risks to the sector,” says Tostevin, who thinks that competition from lower-cost locations like Poland or parts of South America could alter the tech landscape, “but Austin is in a strong position because of the cost base and the talent base.”

Buying guide

● Real estate taxes are typically 2.4 per cent per year in Texas, but range from 1.8 per cent to 2.6 per cent depending on location

● Circuit of the Americas, the Formula 1 and MotoGP racetrack, opened in Austin in 2012

● The median age of residents in Austin is 31, compared with 38 in San Francisco and 42 in Berlin

● The climate in the city is warm and humid. Highs in August reach 36C

What you can buy for . . .

$500,000 A one-bedroom condo apartment in downtown Austin

$1m A three-bedroom house in the Central area

$5m A six-bedroom family home on the banks of the Colorado river

Main photograph: David Liu/iStock

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