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Social housing: Affordable housing in Vienna
Social housing: Affordable housing in Vienna

Video: Social housing: Affordable housing in Vienna

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Video: Social Housing in Vienna 2023, January
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The special housing policy and a hundred-year-old concept of social housing give Vienna affordable housing for its residents. The city does not want to forego the promotion of property.

Table of contents Table of contents Social housing: what makes Vienna better than other big cities

  • The Vienna concept for social housing
  • The extent of social housing in Vienna
  • Social housing in Germany
  • Expert interview: Real estate ownership often leads to lower housing costs

Table of contents Table of contents Social housing: what makes Vienna better than other big cities

  • The Vienna concept for social housing
  • The extent of social housing in Vienna
  • Social housing in Germany
  • Expert interview: Real estate ownership often leads to lower housing costs

Housing policy in Vienna: 5.80 euros rent (plus 10 percent tax) per square meter. For hundreds of thousands. Without the negative influences of speculation. And that in the middle of an attractive world metropolis with almost two million inhabitants, grandiose history, cool image and functioning economy. The universities are full of young people from all over the world. And every year Vienna finds itself in the top places in the ranking of the most livable cities.

The Vienna concept for social housing

The living wonder of Vienna was created between 1919 and 1934. At that time, the living situation was catastrophic for many citizens. As a countermeasure, the city started social housing. Vienna's social settlements have never been and are still not geared towards profit. Above all, the city kept these apartments - and not like many German cities sold them to private providers.

The extent of social housing in Vienna

The city now owns 220, 000 apartments. Around 500, 000 citizens - roughly every fourth Viennese - live in such a community apartment. The city is involved in a further 200, 000 apartments. The fact that many people live in apartments where the rent is limited affects the entire rental market and slows down prices. That costs a lot: Austria's capital spends around 600 million euros annually in its housing policy and housing subsidies. "Our goal is affordable and high-quality apartments - not only for poorly-off income groups, but for the general public, " explains Vienna City Councilor Kathrin Gaal.

The middle class in Vienna actually benefits from this housing policy: The income limit for an apartment in a municipal building for a single is well over 40, 000 euros per year. The boundaries for married people and families with children are even higher. However: aspirants of a city-owned apartment cannot expect great luxury. A single may only move into a one-room apartment. There is one room per person in the household. And after months or years of waiting, interested parties receive a maximum of two apartment offers. Housing subsidies are financed by 0.5 percent of gross wages, both from employees and from employers. That is social consensus. Vienna has kept its apartments and adapted them to today's needs. Four thousand new apartments are being planned or are already under construction.

Such a commitment by the municipality not only takes pressure off the rental market. As the owner, the city has direct opportunities to intervene in the energetic equipment of the residential complexes. It is not dependent on the goodwill of private homeowners.

Social housing in Germany

The German model of social housing or social housing was designed completely differently. The social commitment of the apartments often only lasted 15 years. In the 1990s, when many municipalities groaned under their debts, thousands of municipal apartments were thrown onto the market. After all, those responsible heard from the demographers that the population would shrink, and new apartments were not necessary. As a result, social housing almost came to a standstill.

When the situation changed in recent years and housing became scarce in many regions, housing policy failed to provide a sufficient number of affordable rental apartments. Many German municipalities are also increasingly focusing on the promotion of property. Within the framework of municipal support programs, such as in Regensburg, families with children can purchase inexpensive building land and also receive a subsidy for house financing.

Burgweinting
Burgweinting

In the 1980s, Regensburg developed the new district of Burgweinting with 400 hectares of residential and commercial space in order to keep land prices in check. Young families were given preference when the property was allocated and also subsidized.

Photo: Alamy stock photo / Hans Blossey

Incidentally, the city of Vienna is also familiar with the promotion of property: anyone who has lived in a cooperative apartment for a long time can take it on at favorable terms. The municipality also has support programs for the creation of new living space. Because not all people want to pay rent forever. Not even in Vienna.

Expert interview: Real estate ownership often leads to lower housing costs

Prof. Dr. Michael Voigtländer heads the field of real estate economics at the Institute of German Economy in Cologne. He teaches housing policy at several universities and is the author of the book "Luxury Living: Why Our Cities Are Getting Ever More Expensive and What Must Be Done Now". In an interview with DAS HAUS, the expert for housing policy and social housing explains the relationship between home ownership, interest and property prices.

Does a housing policy like that in Vienna or such a cheap rental market influence the prices for real estate?

That already has an impact: If rents are cheap, it is less attractive to invest in home ownership - which is reflected in the property price index. This can lead to less demand for property. The prices are often lower. But you have to ask: Why are rents so low? If they are regulated, but there is still a shortage of living space, this ultimately means that existing tenancies are favored: the people there then live cheaply - the rest find nothing.

Then what happens on the market?

In such a case, the demand for apartments remains high. And that's exactly what happens in Vienna. If you are one of the lucky ones who is awarded a parish, everything is fine. But rents remain high on the free housing market and there is still demand for home ownership.

What actually speaks for buying a home today?

One reason is certainly the low interest rate level. One is often frightened by how much the prices have risen. However, if you compare this with the development of interest rates and calculate the financing, you will find that you can finance cheaper today and have a lower burden than a few years ago. It is often cheaper to use a real estate loan than to pay rent. The housing costs in the property are therefore cheaper.

A second reason is old-age provision: we have big problems with statutory pension insurance. Also in the company pension scheme or in the reduced payments of life insurance. The reason is the lower interest rate level. The own property secures the pension. There is a third reason in big cities: Many are concerned about displacement from their neighborhood or gentrification. Of course, ownership of a condominium protects against this.

Wohnanlage am Handelskai
Wohnanlage am Handelskai

Vienna continues to grow: 3, 700 new social housing units are currently being planned.

Photo: querkraft

Is buying in the big city cheaper than renting despite high prices?

That also applies there, because rents there have risen sharply. With the exception of Munich: because of extremely high prices, buyers are no less burdened than tenants. But if you have paid off your apartment, then you have a correspondingly valuable home. In the big cities, the question is also: Who benefits from the big price increases there? Socially, it would certainly be desirable if a broad class of people could benefit from it.

Will the high price increases in the metropolises continue?

Probably yes. Because the cities continue to grow. But the rates of increase may decrease somewhat.

Interest rates are low today. Does it have to stay that way?

No, but there is some evidence that interest rates will not change dramatically. We always look at the monetary policy of the European Central Bank. But interest rate policy does not do this alone. Interest rates are ultimately determined on the global capital market by the interplay of supply and demand. Providers are the savers. And there we have an exciting development: in all countries in the West, people are getting older, but the retirement age is not being adjusted. That is why more private provision must be made, i.e. more savings must be made. On the demand side, relatively little is invested despite the low interest rates. This is due to the fact that the labor force is shrinking and that digitization requires less investment.

A lot of savers' money on offer and little demand for credit, so that will lower interest rates?

That will continue in the coming decades. That is why, according to many economists, the interest rate level will remain relatively low. I don't think we'll see a four or five before the decimal point on follow-up financing interest.

Is property ownership still worthwhile as an investment today, given the high prices?

You have to look at the investment alternatives: Many other things only yield very low interest rates.

What would you recommend to private real estate investors?

At the moment there are many who are trying to offer real estate overpriced. Therefore, you should definitely have knowledge of housing policy and the market. I see opportunities in the area surrounding the large metropolises, in university cities, but also where you know your way around. Many smaller investors have the advantage that they know their place of residence well and can assess micro-locations well. You should focus on that. This is an advantage over the big investors.

Can you name some interesting regions?

When it comes to peripheral locations, I think of Offenbach in the Frankfurt area or Neuss in the Düsseldorf area. Or to medium-sized cities like Bonn or Münster. These are locations where a real estate investment can still be worthwhile.

How do you invest as an expert yourself?

Scientists don't invest that much. I diversify and look for properties in my catchment area that I know about. But I found that it is not that easy - the offer is no longer as wide.

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