The federal government is reacting to the lull in housing construction and is presenting its housing package this followingnoon. In Vienna-Floridsdorf at the construction site of the residential area “Am Hirschfeld”, Chancellor Karl Nehammer (ÖVP) and Vice-Chancellor Werner Kogler (Greens) as well as representatives of the Association of Non-Profit Building Associations (GBV) will answer journalists’ questions. It is recommended that the media appointment be scheduled at short notice Footwear.
Numerous property developers have recently postponed planned projects or suspended them indefinitely, industry giants Buwog and EHL recently reported. Nevertheless, construction costs rose by 2.8 percent year-on-year. Compared to the previous month of December 2023, costs increased by 1.5 percent. “We have several projects that are practically in the starting blocks,” said Buwog managing director Andreas Holler. “It’s just not worth it at the moment,” added Daniel Riedl, board member of the German Buwog parent Vonovia. “The value we can generate is below the cost of production,” he said.
According to the current Vienna housing market report, only around 13,200 residential units will be completed this year and a further decline can be expected in the following years 2025 and 2026. In 2023, building permits for new residential projects fell to around 11,500 units. Compared to the record year of 2019, this represents a decline of more than 46 percent.
What do the interest rates do?
EHL managing director Karina Schunker said that because of the interest rates, buying a condominium has become a long way off for many people. The buyer target group has been minimized, for example to customers who have an inheritance available in order to be able to meet the hurdle of 20 percent equity and the monthly loan installment.
However, the real estate industry also tries to spread an optimistic mood among potential customers. “We all agree that interest rates will fall over the course of the year and then the markets will pick up once more,” said the Austrian head of the real estate consulting firm CBRE, Andreas Ridder, recently. It is hoped or expected that the ECB (European Central Bank, note) will reduce key interest rates in the first half of the year.
Rejection for 100,000 euro bonus
The social partners recently brought up a home ownership bonus of up to 100,000 euros, but there was widespread rejection of this. Plans to have taxpayers help out all those homeowners who had relied on variable interest rates despite low interest rates were also met with little enthusiasm. Initiatives from the construction and banking sectors as well as parts of politics to relax the criteria for awarding interest were once more met with rejection from consumer and debt advisors.
Sealing the soil is also an issue. In the stalled negotiations over an Austrian soil protection strategy, Vice Chancellor Kogler wrote a letter to the Lower Austrian governor Johanna Mikl-Leitner (ÖVP) last week. In it he asks the current chairwoman of the State Governors’ Conference to have a positive influence on reluctant federal states. The aim is to limit land consumption to 2.5 hectares per day by 2030, as set out in the government program. Mikl-Leitner countered that she wanted a discussion “within a reasonable framework”.
Unemployment in construction has also increased recently. In January it increased by 6.6 percent year-on-year.
