The Urgent Need for Government Action to Make Housing Affordable Again

The state and federal government must act to make housing affordable again

St. Polten (OTS) – “We are already experiencing it again: At the beginning of the Ukraine war, the SPÖ said that we had to intervene in the market – the ÖVP was strictly against it. For more than a year now we have had to live with the fact that Austria has the third highest inflation rate in the EU. That billions and billions of taxpayers’ money fizzle out completely without effect and prices keep rising. Countries that immediately intervened heavily in the market, such as Switzerland, France or Spain, have contained inflation. Austria’s government fought tooth and nail, only to always go months too late in exactly the direction suggested by the SPÖ.

Exactly the same in Lower Austria: the SPÖ has demanded an energy price cap, black and blue are doing nothing. It’s still August, but next autumn will definitely come, energy prices will rise again and everyone will personally notice that the government has been inactive. It’s sad, but as an economist I unfortunately have to say that there is a lack of economic competence not only in the FPÖ but also in the ÖVP,” says SPÖ state chairman and control state councilor Sven Hergovich.

And Hergovich continues: “What is the living situation like here in Lower Austria?
63 percent of Lower Austrians live in property. 55.8 percent in home ownership and 7.5 percent in home ownership. Almost all of them have financed their apartment or house with a loan or are still doing so. Almost everyone is burdened by the massively rising interest rates. More and more Lower Austrians can no longer service their loans or have to do without everything to keep their house or apartment. That’s a scandal. Because the banks benefit enormously from the high inflation. Their profits skyrocket while the home builders can no longer afford to live,” adds Hegovich and continues:

“What is our solution now? In Austria, housing loans in June 2023 amounted to EUR 133.2 billion. 50% of the loans have variable interest rates, 6% have fixed interest rates over the entire term, and 44% have a mixed interest rate. We demand: A house builder should pay a maximum of 3% interest. An interest rate freeze is needed. I know that three percent is already a lot. Even higher interest rates, as is now common for many with interest rates of four or five percent, are unaffordable. The difference between the home builders’ interest rate and 3% is to be borne by the state. An excess profit tax or bank levy is proposed for financing. This is easy to finance: Because the Austrian banking sector made a profit of over 10 billion in 2022, which is 4 billion more than in 2021. A record profit is expected for 2023 due to rising interest rates. 25% of the banks’ profits are therefore sufficient to finance the SPÖ’s measures for the house builders,” Hergovich knows.

Here’s an example:

Borrower A took out a variable loan of EUR 280,000 on August 6, 2020. A premium of 1% over the 3-month Euribor was agreed. At the beginning of the loan repayment, the rate was 995.52 euros.
On August 3, 2023, the interest charge was 4.72% – that is, the rate has increased to 1,578.57.
With the interest rate cap of the SPÖ (3%), the rate would currently be reduced to: 1,340 euros. Ie the monthly rate would be reduced by 237.66 euros. If the conditions remain the same, that would be around 2,850 euros in savings per year.

“But action is also needed at the state level. The ÖVP and FPÖ should finally follow the lip service to affordable housing and the enabling of property with deeds. The FPÖ itself demands excess profit taxes from banks. Demanding is not enough. The ÖVP likes to complain that property is no longer affordable. Our proposal is on the table. A call from Mikl-Leitner to Chancellor Nehammer is enough and we get an interest rate cap. But that’s not all. I would also like to remind you that the ÖVP and the FPÖ have stopped building non-profit housing in Lower Austria. Up to 7,000 affordable apartments will be lost this year because black and blue prevents affordable housing construction. In order to get the increasingly dramatic price situation under control, we demand an immediate resumption of non-profit, subsidized housing and massive investments in housing. Styria shows that this is possible, where black and red have agreed on a large package for residential construction. You can immediately do that for Lower Austria as well,” concludes Hegovich.

Questions & contact:

SPÖ Lower Austria
Daniel Steinlechner
press secretary
+43 650 4919830
daniel.steinlechner@spoe.at
noe.spoe.at