Affordable Housing Disappears - and With It, Vienna's Reputation as a Model Metropolis

The social scientist Sarah Kumnig, who works at the Institute of Spatial Planning at TU Vienna, sees affordable housing under pressure according to a press release on Tuesday. Despite social housing and rent regulation in old buildings, "housing is becoming more expensive even in Vienna," she notes. In the federal capital, around 80 percent of the housing stock are rental apartments - almost half (43 percent) social housing and a third (33 percent) private rental.

Old building rents about 45 percent more expensive than ten years ago

Two-thirds of the apartments are considered "old buildings," meaning they are in buildings constructed before 1953 and thus primarily subject to the reference rent. "Despite these comparatively strong regulations for a large part of Vienna's apartments, average rental prices have increased by about 45 percent over the past ten years - from 8.40 euros per square meter in 2014 to 12.20 euros per square meter in 2024," said Kumnig, referring to data from Statistics Austria.

"The Viennese old building plays a central role in housing supply for low-income households - however, this sector has experienced significant change in recent decades." According to a recent study, about a quarter of the old building stock was sold between 2000 and 2022, said the co-author. The share of commercial buyers has risen sharply from 53 percent in 2000 to 92 percent in 2022.

New management strategies

Owners have changed their management strategies in the old building stock to increase their return opportunities, says Kumnig, referring to further studies. Rental apartments are being converted into condominiums or demolished and newly constructed in the less strictly regulated new buildings. This can lead to conflicts with existing tenants. In "conflict houses," practices have been identified in an analysis that represent "displacement pressure" for those affected, "meaning pressure to move out against their will".

Even though Vienna seems to hold a special position compared to other European metropolitan regions due to the high proportion of socially protected rental apartments, the challenges are similar, emphasizes economist and professor at the University of Applied Sciences for Business, Management and Finance bfi Vienna, Elisabeth Springler. She pointed out, among other things, the increasing use of short-term rentals - keyword Airbnb -, the growing difference between rents in the socially protected and private sectors, and the decreasing affordability of ownership due to real estate prices rising disproportionately compared to income.

Interest rates rise, housing subsidies not earmarked

These problems have been exacerbated by rising interest rates and the lack of earmarking of housing subsidies at the state level. "For the situation in Vienna, the increasing 'financialization' due to high price dynamics is particularly noticeable. Housing policy measures must be implemented for the provision of affordable housing - both in production and in resale or re-rental in the existing housing stock," said Springler.

The conditions for subsidized new housing construction are "difficult," emphasized Kumnig. Although, in addition to municipal housing, non-profit housing is considered an effective strategy to provide affordable housing in social housing. However, due to the principle of cost recovery, rental prices must be calculated based on the costs incurred for construction and maintenance. The currently high land prices lead to high cost-covering rents in new construction. In the paid-off stock, however, this system allows for "rental prices that are even below municipal housing rents."

To curb the price increases for building land, the Vienna Building Code has provided for the new zoning category "subsidized housing" since 2018 - with the requirement that two-thirds of the area should be used for subsidized housing in new zoning. This also applies when private landowners sell to commercial developers. In subsidized housing, upper limits for land prices and rents are defined. "Further analyses will be needed on the actual impact of the zoning category," said Kumnig.

(APA/Red.)

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