High interest rates and stricter lending rules for real estate loans are causing headaches for home builders. For many people, the dream of owning their own home has become a distant dream in the last year and a half. Experts are sounding the alarm and warning of far-reaching consequences – also for tenants.
Increased construction costs and more expensive loans have not only caused large property developers and real estate empires like Signa to collapse in recent months – they are also becoming an enormous burden for home builders.
It’s not just those for borrowers ECB key interest rates a problem. In the summer of 2022, the lending guidelines for real estate loans were also published in the so-called KIM regulation tightened.
Now borrowers have to 20 percent of own funds bring with you, and the monthly rate may not exceed 40 percent of the net household income. The maximum loan term is 35 years limited.
“Double hammer for the borrowers”
“The underlying idea was basically good and important,” said Financial expert Stefan Goldschmidt in conversation with PULS 24 about the KIM-VO. The aim was to ensure that the long zero interest rate policy was fueled Real estate market “not overheated”.
But almost at the same time the ECB initiated the interest rate turnaround. Inflation has also caused construction costs to rise massively – coupled with more expensive loans, “that’s what it is now the double hammer for the borrowers“, so Goldschmidt.
Lending collapsed
The result: “The demand for real estate financing is drastic – by up to two thirds” said the federal banking and insurance division of the WKO in response to a PULS 24 request.
But why is that? The key interest rates or the strict KIM-VO? “The truth is always in the middle,” said Gerhard Wagner, managing director of the creditor protection association KSV1870 in the PULS 24 interview. But for him it is clear that the stricter procurement guidelines “have had a massive impact and the financial reach of young people wanting to build has been massively restricted”.
Goldschmidt also agrees: “The average consumer can no longer do this easily. “Especially for the classic young family: Buying land privately and building on it may still be possible in areas where the land is cheap.”
100,000 euro home builder bonus the solution?
Last week, an initiative by the social partners caused a stir. In order to support the construction industry and home builders, a… 100.000-Euro-Bonus here. The capped bonus should cover “up to 20 percent of the costs” and be “in the direction of 100,000 euros,” said Muchitsch and WKÖ boss Harald Mahrer (ÖVP).
Rejection came quickly and from all sides. Even SPÖ leader Babler sees it as “not a social democratic model”. ÖVP Finance Minister Magnus Brunner also said: “There are certainly more sensible measures.”
“Timely, but not very clever”
KSV1870 managing director Wagner cannot agree with the suggestion either. Such a measure “without any recognizable consideration is not the right didactic or pedagogical signal,” he said. Above all, it would not solve the problem itself. “Perhaps contemporary, but not very clever,” was his verdict.
Dramatic consequences for the construction industry and tenants
The changed conditions mean that significantly less living space is being created. By 2026, the value will fall by around 25 percent, the WKO calculates: “While 62,300 apartments were finalized in 2022, the value will fall to 46,400 in 2026 if countermeasures are not taken immediately.”
Two groups particularly feel this: the construction industry and tenants. Forecasts for the order situation in the construction industry are already bleak; we hear from the industry that they are looking towards 2025 with concern. In many places the order books are far from full.
Above all, less living space can stimulate the rental market. The continued high demand is met with less supply – which causes prices to rise. “What is now needed are quick, effective measures to make housing construction affordable and financeable again,” says the WKO.
For Gerhard Wagner from KSV1870 it is also clear: “Construction costs will not go down in the long term.”
Experts are calling for adjustments to the credit rules
For many experts, part of the solution is to revise the lending regulations. Not only the KSV1870, but also the banking division of the WKO are in favor of this. “It is clear that the regulation, in view of completely different framework conditions than before its introduction, needs to be re-evaluated“, it said.
During the week, Wifo housing expert Michael Klien also spoke out in favor of this. “You should intervene through low-interest loans and at the same time with one Relaxation of the KIM Regulation “As a whole, the financing options for households, non-profit organizations and other property developers will be simplified again,” he said in the Ö1 “Mittagsjournal”.
Hoping for a turnaround in interest rates?
One could also help The ECB’s interest rate turnaround. After inflation figures have fallen, experts are already expecting the first Interest rate cuts. While these were initially expected for March, analysts are now assuming summer 2024.
“If interest rates fall, that’s a great thing. But it will take a while for that to have an impact on the construction industry,” said Wagner. That’s why he doesn’t have any “great hope” yet. Because “It’s slower to repair than to destroy.”
But financial expert Stefan Goldschmidt didn’t just want to see the bad in the PULS 24 interview. “Anyone who builds up their own funds early enough and finances them thoughtfully, with a solid partner, Even today, you still have the opportunity to realize your own home“, he said.
2024-02-25 07:09:02
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