Unraveling the Housing Paradox in Austria: An In-Depth Analysis

Unraveling the Housing Paradox in Austria: An In-Depth Analysis

Austrian Housing: A Tale of Numbers

On the surface, Austria’s real estate landscape paints a puzzling picture. According to raw data, the country exhibits a notable 13.4 percent of residential space lying vacant, with no residents registered. This translates to a significant number of houses and apartments not occupied, an occurrence that seems peculiar given the overall housing demand in the country. The Austrian capital, Vienna, with a 9.7 percent vacancy rate or 104,272 vacant houses and apartments, has the lowest share of officially vacant residential space in Austria. Yet, this figure contradicts the reality of housing scarcity in Vienna, a situation that warrants further examination.

Scratching Beneath the Surface

Upon closer inspection, the predicament of vacant houses amidst a housing shortage becomes even more perplexing. The real estate market has been impacted by various factors, including the ongoing pandemic, which has led to significant write-downs on properties. For instance, Austrian real estate group Immofinanz reported a net loss of 37.6 million euros in the first quarter due to write-downs on properties. The revaluation of assets, primarily in the retail segment, led to negative effects of 45 million euros, underscoring the impact of the pandemic on the real estate sector.

However, the company managed to grow its rental income by 13.4 percent to reach 74 million euros, thanks to property acquisitions and completions. The easing of COVID-19 related restrictions also saw the reopening of 79 percent of the retail space in its portfolio. The company even arranged an additional unsecured credit line of 100 million euros, demonstrating resilience amidst the crisis.

The Vacancy Tax: A New Trend in Austrian Real Estate

In a bid to address the housing shortage and the rising rents, two Austrian provinces of Salzburg and Styria have enacted laws that give local municipalities the power to impose a tax on vacant apartments. This new tax, while modest in terms of financial burden, can pose significant administrative challenges, especially for larger real estate companies operating in multiple regions. The tax applies to apartments that remain unused as well as those used as secondary residences, such as holiday homes.

The tax rate is left to the discretion of local municipalities. For example, in Styria, the tax for a 100 square meter apartment may not exceed 1,000 euros per calendar year. Meanwhile, in Salzburg, the maximum tax limit is determined by the size of the apartment. The tax is generally up to 20 euros per square meter per year for apartments not older than five years and 10 euros per square meter per year for other apartments.

Towards a Balanced Housing Market

The introduction of the vacancy tax is just one of the many steps the Austrian government is taking to address the housing imbalance in the country. By encouraging the utilization of vacant residential spaces, it seeks to alleviate the pressure on housing demand and stabilize rental prices. However, the housing market remains a complex landscape, with various economic, social, and policy factors at play.

Interestingly, recent studies predict that the Austrian housing market is set to ease, with increased construction activity and weaker demand expected to eliminate backlog demand by 2020. With the growth rates of household numbers decreasing steadily, housing demand will continue to evolve, requiring adaptive and flexible real estate policies and strategies. Therefore, it seems that the tale of Austria’s housing paradox is still being written, with its future chapters depending on the market’s response to these changing dynamics.