Association of the non-profit: Rising rents and falling incomes shape the picture in the state capitals. 70 percent live in rental apartments.
Even in the corona crisis, prices on the housing market are rising unchecked. “In the Covid era, rising rents and falling incomes are the exciting picture at the moment,” said the chairman of the Austrian Association of Non-Profit Building Associations (GBV), Bernd Rießland, summarizing the current situation. “We still have the greatest demand and price increases in the state capitals.”
Around 70 percent of people in urban areas lived in rented apartments. That also corresponds to the international trend. “I can look to New York, Hamburg or Paris – in urban areas there is a desire of investors to build up assets and rent them out. The vast majority, sometimes well over two thirds, are rental apartments,” explained the GBV chairman on Thursday in an online press conference. The non-profit housing construction plays “a rent-dampening role” there.
In the state capitals, the non-profit organizations have a market share of around 23 percent. Outside the cities, the proportion of non-profit rental apartments is naturally much higher at 50 percent. “In rural areas it is not interesting for investors because of the moderate price development – investors do not reach out there,” said Rießland. In the countryside, only a quarter of the people live in rental apartments. “Of course there is a large proportion of single-family homes there.”
However, land prices have also doubled “in peripheral locations such as Lower Austria, the surrounding areas of Vienna and Carinthia,” noted GBV deputy chairman Herwig Pernsteiner. In Vienna they have “tripled and quadrupled” since 2005, according to Rießland. Where building is being built on a large scale, prices here were between 200 and 300 euros per square meter of usable space until 2005/2010, which then rose to 400 to 700 euros. “But that has now been captured,” he said, referring to the Vienna building regulations amendment at the end of 2018. Vienna is slowly heading back to a “balanced market” – thanks to the strong construction activity in recent months and years.
Living space in new buildings decreases
In the federal capital, the housing market situation has changed significantly in the past ten to fifteen years because of the population surge – before that, the development was stable. About 20 years ago, when there was not yet such great pressure on demand, rents on the free market were 11 percent higher than for the non-profit, according to GBV. With the current deals for apartments that were built after 1945 and are not subject to the cap by reference values, the rents in the commercial, i.e. in the investor area, are 45 percent higher.
“The result is that smaller apartments are being built,” said the GBV boss. The majority of the apartments are bought by landlords. “The owner-occupiers are often unable to fulfill their desire for property.” You can't afford it like that. In the “Corona context”, Rießland said that households are “at the limit of what they can afford and have to move into smaller apartments”. There are households that have to spend up to 50 percent of their income on living, he said, referring to a corresponding survey by the Oesterreichische Nationalbank. “We're at problematic heights then.”
In rural areas, the differences between freely rented and non-profit housing are much smaller than in metropolitan areas, where there is strong demand for living space.
“Extremely high average rents” are required in Innsbruck and Salzburg, but also in Vorarlberg. “Those are the top three.” The Tyrolean capital stands out in particular. “With new building rents that shoots up to 14.90 euros per square meter in Innsbruck,” stated Rießland.
“Investors are on average 13.20 euros per square meter (per month, note) and are therefore 50 percent more expensive than the non-profit”, emphasized the GBV chairman. In the old structure (built before 1945), around 10 to 11 euros per square meter are currently to be paid on the private market, in non-profit buildings of the same age the monthly rent is around 4 euros per square meter – operating costs and taxes are added.
