Housing Market Heats Up as Regulations Ease
In a move welcomed by industry experts, the recent expiration of the Credit Institutions Real Estate Financing Measures Ordinance (KIM Ordinance) has sparked optimism for a surge in homeownership and economic growth.
Karlheinz Kopf, Secretary General of the Austrian Economic Chamber, believes the abolishment of this ordinance marks a turning point for both the housing market and the broader economy.
“From the perspective of the economy, this is an extremely positive sign,” Kopf declared. He points out that the KIM regulation had placed a significant burden on aspiring homeowners, pushing the prospect of new residential construction to the brink of collapse.
Beyond the direct impact on individuals seeking to buy or build homes, Kopf highlights the ripple effect the KIM Ordinance had on a wide range of interdependent industries.
“In addition to the citizens willing to build and buy, the construction industry and real estate industry, numerous other sectors of the economy suffered from this standstill in new housing construction,” Kopf explained. “Whether furnishing specialist retailers, the construction industry, or the banking industry, the lull in the housing market was clearly noticeable.”
The expiration of this regulation is anticipated to inject much-needed life into the housing market, potentially stimulating economic recovery in 2025.
“It is extremely pleasing that it is becoming easier again to fulfill your dream of owning your own home,” Kopf concludes, expressing the sentiment shared by many across Austria.
The KIM Ordinance, enacted in recent years with the aim of ensuring financial stability within the real estate sector, had inadvertently stifled the market, making it difficult for potential homeowners to secure funding. Its termination is expected to have a cascading positive effect, encouraging new construction projects and revitalizing related businesses.
This renewed activity in the housing market is projected to create new jobs, stimulate investment, and provide a boost to the overall economy. As更加individuals are empowered to realize their dream of homeownership, a sense of economic buoyancy is anticipated to take hold.
What are the key indicators the OeNB uses to assess the state of Austria’s housing market and their current levels?
## Housing Market Heats Up? Not So Fast Says OeNB
**Interviewer:** Karlheinz Kopf, Secretary General of the Austrian Economic Chamber, recently expressed optimism about the housing market following the expiration of the KIM Ordinance, predicting a surge in homeownership and economic growth. While this is positive news, some might be surprised considering recent data from the OeNB, Austria’s central bank, suggests a cooling housing market. Could you shed some light on this seeming contradiction?
**Expert:** The OeNB’s latest report does show a slowdown in the growth of residential property prices in Austria. Their fundamentals indicator for residential property prices dropped to 34.2% in the fourth quarter of 2022, down from 37.3% in the previous quarter [[1](https://www.oenb.at/dam/jcr:d9b733fa-f255-432e-8f83-1c4bba1b3904/property-market-review-q4-22.pdf)]. This indicates that the financial stability risks associated with the real estate market have levelled off, not necessarily heated up as some might expect.
**Interviewer:** So, the OeNB data suggests a cooling market, contrary to Mr. Kopf’s prediction. What factors might be at play here?
**Expert:** It’s important to remember that economic indicators often react with a lag. The KIM Ordinance’s expiration is relatively recent. It will likely take time for its full impact on the housing market to be reflected in the OeNB’s data. Other factors, such as rising interest rates and inflation, might also be contributing to the slowdown in price growth.
**Interviewer:** Does this mean Mr. Kopf’s optimism is misplaced?
**Expert:** Not necessarily. While the OeNB data paints a picture of a stabilizing market, it’s too early to say definitively whether the abolishment of the KIM Ordinance will lead to significant price increases. The housing market is complex and influenced by a multitude of factors. We need to keep monitoring the situation closely to see how things unfold.
