Medium-Sized Companies in Austria Struggle to Afford Real Estate Due to Strict Lending Guidelines and High Interest Rates

It is currently almost impossible for medium-sized companies in Austria to buy property on the real estate market.

The reason: On the one hand, as a result of the explosion in energy prices and runaway inflation in the previous year, extremely strict lending guidelines were issued in this country, including the requirement that the loan installment may not exceed 40 percent of income. On the other hand, the European Central Bank (ECB) raised the key interest rate several times in the past year – it is currently at a whopping 4.25 percent.

As the “Kleine Zeitung” reports, the Arge Eigenheim – an association of 100 housing companies – now calculates that with a household income of 4000 euros net per month, even the purchase of a small apartment is unattainable.

For a couple under the age of 30, who earn a total of 4,000 net per month, buying a 60 square meter apartment at 417,000 euros gross is unaffordable.

First, there is the existing policy that 20 percent of the purchase price must be paid from your own funds. The remaining 80 percent, which would have to be financed by credit, would amount to 333,000 euros in the present example.

With a term of 30 years and an interest rate of five percent, however, the net 4,000 euros per month would not be enough. With a household income of 4000 euros net, the monthly loan installment should be a maximum of 1600 euros. In the given example, however, the actual financing would amount to 1750 euros.

Therefore, Arge Eigenheim is now calling for the strict lending guidelines to be relaxed in the autumn.