You can hardly afford living space these days. A Gallup survey conducted for Raiffeisen Immobilien in the spring of this year shows how difficult it is for people with average incomes to buy or rent in some federal states. The population feels cornered when it comes to affordable housing. After all, housing is a fundamental right, many say.
When it comes to the wallet, customers even neglect the important climate protection when looking for a place to live. The state does not intervene enough, said Peter Mayr, Managing Director of Raiffeisen Immobilien Salzburg, to journalists on Wednesday. Young people are burdened, because without a large inheritance, hardly anyone can create their own living space. The affordability limit is quickly reached, because with a net income of less than 1,500 euros, renting an apartment or paying off a condominium is difficult.
differences in affordability
Real estate prices have been rising for 17 years, and even the pandemic has not slowed things down, but instead caused prices to surge, explained Matthias Reith, senior economist at Raiffeisen Research, in a press conference on Wednesday. In order to be able to pay off an ordinary single-family house, five years of net household income had to be used in 2005, he calculated. Last year there were already eight annual household incomes.
At an average of 17.7 percent in 2020, housing costs in Austria in relation to disposable household income were in the upper middle range in Europe, according to Eurostat. According to the Raiffeisen experts, households will already have to spend a larger part of their income on housing this year due to the rise in energy prices. This will particularly affect low-income households. They already need around 40 percent of their income to cover housing costs.
At 55 percent, the ownership rate in this country is slightly higher than the rental rate. More than half of the owners no longer have to pay a mortgage loan.
Caspar Engelen, Real Estate Research Analyst at Raiffeisen Research, emphasized that not everyone is affected by the decline in affordability. While only a few average earners might afford to own property in Vienna, Vorarlberg or Salzburg, it is comparatively cheap to buy an apartment or house in Burgenland. In addition to the east-west divide, there is also an urban-rural divide, with the exception of tourism hotspots such as in Tyrol.
Raiffeisen real estate spokesman Peter Weinberger calls on the government to take measures so that everyone living in Austria has affordable housing available. The state must “repair affordability and see whether all available apartments are being used properly.” Keyword vacancies, living space might be created here.
Weinberger calls for a simplification of tenancy law for owners of used real estate, which accounts for 99 percent of the country’s living space. Town centers should be revitalized, he demands. And last but not least, he would like more and more easily accessible funding for renovations. “We see a lot of potential as Raiffeisen Immobilien and Raiffeisen Group to create housing that is more affordable,” says Weinberger.
Index shows price increase
The square meter price for new apartments in Austria increased by 11 percent in 2021 to an average of 4,782 euros. In the first quarter of this year there was a further increase of 13 percent, according to the consulting firm Deloitte. According to its “Property Index 2022”, Vienna was 21 percent above the Austrian average with a square meter price of 5,788 euros. In the European city ranking, however, Vienna was far behind cities such as Paris with 13,462 euros or Munich with 10,500 euros. “Although it may sound paradoxical to some, our capital is relatively affordable,” says Gabriele Etzl, Partner and Head of Real Estate at Deloitte Legal.
In international comparison, renting living space in Vienna and Austria is also cheap. At an average of EUR 8.66 per square meter, the rent in the federal capital was even cheaper than in Graz (EUR 10.40) or Linz (EUR 10.22). This puts you in the lower third in Europe.
Deloitte summarizes: Living in this country is becoming more and more expensive. Rents in Vienna are still affordable for the general public, but property is now a luxury good.
