Apartment prices continue to rise sharply, although a lot has recently been built. But what is needed is not always built. In addition, there are now stricter rules for loans.
Build, build, build, then relax the situation. In the case of real estate, this simple assumption has not been true. In recent years, building permits in Austria have reached record levels. But demand still exceeded supply. Money was cheap and prices were galloping.
In the first quarter of this year alone, prices for residential real estate rose by 12.9 percent across Austria and by 11.8 percent in Vienna, according to data from the Oesterreichische Nationalbank (OeNB). The development in rents is more moderate: between 2018 and 2021, they rose by twelve percent in the federal capital, according to a study commissioned by the Chamber of Labor (AK) at the Technical University of Vienna.
During this period, around 58,000 new apartments were completed in Vienna. On the other hand, there is a population increase of 43,000 people, which corresponds to 21,100 households. But there is no sign of cheap rents. “It is not built for living, but for investment,” says Thomas Ritt from the AK.
Stricter requirements for loans
As a result, average families cannot afford to own a flat, criticizes the AK and provides an example calculation: The disposable household income of a family with two children in Austria is on average 56,200 euros per year. A 100 square meter apartment currently costs around 770,000 euros, including ancillary purchase costs of five percent (which is low, NB). 20 percent own funds amounted to 154,000 euros. A loan for the remaining amount over a period of 30 years with an interest rate of two percent results in an annual rate of around 27,500 euros. That corresponds to 49 percent of disposable income. There are also operating costs, electricity, heating and reserves. This puts the family on the brink of poverty.
It has to be said that prices have risen rapidly since the financial crisis, but at the same time the financing costs were historically low due to the European Central Bank’s low interest rate policy. But the turnaround in interest rates is imminent, and there are also stricter requirements from the financial market supervisory authority for lending: As of August, the terms will be limited and the entire property may no longer be financed with debt – at least 20 percent equity must be proven. Some will be even less able to afford their own home. If you have a variable-rate loan, you will incur higher monthly costs.
The housing researcher Wolfgang Amann sees an oversupply of real estate – albeit in the case of so-called micro-apartments, of which a particularly large number have recently been built. These are often financed by investors and they are interested in high rents. They would therefore rather accept vacancies than lower rents.
Outdated vacancy data
The Chamber of Labor is now demanding a vacancy tax once again. In Tyrol, such a fee has already been decided on apartments and buildings not used as a residence. In Vienna, too, the debate keeps coming up. Apartment owners should be motivated to rent out their vacant apartment. But there is no current data on how many apartments in Vienna are not rented. The last survey is more than six years old: At that time, 35,000 apartments were recorded where no one was registered. A new survey is currently not planned.
At the end of the previous year, the Viennese SPÖ raised the issue again. In the past, such attempts failed due to constitutional barriers. And there are serious opponents: the house and landowners’ association sees a vacancy tax as the first step towards expropriation.
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