The figures are spectacular. Social and affordable housing accounts for 43% of the housing market in Vienna: 22% are “municipal flats” and 21% are managed by non-profit associations. And since 2000, the number of new housing units in these categories has risen by two-thirds. In 1900, 300,000 inhabitants were poorly housed or homeless, whereas in 2023--with the same population--nearly half of the city’s residents benefit from affordable housing.
Unlike in Luxembourg, the Austrian dream is not necessarily to own a home. Over there, 76% of the population rent their flats. Rental prices for the affordable flats are 25% lower than those on the private market, according to the bodies in charge of managing both apartment types, i.e., local councils and cooperatives. Between 2009 and 2022, private market prices rose by 59%, compared with only 42% for the social/affordable options.
Change in price per square metre between the public (red) and private (blue) sectors
A recent study by the Austrian Institute for Economic Research (Wifo) shows that a 10% increase in the market share of non-profit associations leads to a reduction in unregulated rents of between 30 and 40 cents per square metre. For a 70 m2 flat, Wifo notes, this corresponds to savings of up to €340 a year.
To qualify for a council flat, i.e., to obtain a “Wiehner Wohn Ticket,” you have to be over 17, have lived at the same address for two years, be Austrian and, above all, be below the income limit. That limit is €53,340/year net for a single person and €79,490 for couples, in a country where the average salary is €40,858/year gross for a man and €33,428/year gross for a woman, according to data from the Austrian Court of Audit.
1% of the cost of construction for each year of rental
Around 80% of employees could qualify for these types of accommodation. How does it work?
First of all, the 182 “cooperatives” are mainly non-profit associations that are obliged to reinvest all their profits in the development of new projects or the maintenance of buildings in their portfolio. They manage 985,000 flats, of which 653,000 are their own.
Tenants are required to pay a building contribution on arrival, which will be returned to them on departure less 1% for each year of residence, and then a rent of around €7-8 per square metre according to the latest statistics, compared with 11% in the private sector. The starting sum can be around €15,000 for 70 square metres, and over the years the authorities have added a layer of support for the poorest households.
It’s called Blue Luxembourg.
“Red Vienna,” nicknamed in part for its affordable housing policy, was cited, during the debate hosted by the chamber of commerce, by LSAP head-of-list . When asked during the Paperjam+Delano Business Club debate how much she would like to invest in this idea, the health minister replied that she was aiming for a market share of 20-25% to have an influence on rent trends. “I’m not going to give you a figure, but now is the time to invest. Investing in property is a good investment. Investing in your own property is even better.”
Perhaps unexpectedly, this proposal also features in the DP’s election manifesto. Prime minister , also asked about it, was content to amuse the room by saying--in reference to his party’s colour--“It’s called blue Luxembourg.”
The issue is anything but trivial: since 2000, the Austrian capital has spent between €400m and €1.1bn a year on it, as this graph (below) from Wifo shows.
Apart from its cost--which may or may not be high, depending on the final objectives pursued--the policy pursued in Vienna, at the heart of intense political battles, suffers from increasingly obvious shortcomings. For one thing, speculation on land is driving up the cost of land, even in communal or cooperative projects, which has an impact on the rents set for new tenants. For another, there is no review of the conditions, a fact that brings no particular benefit to the most disadvantaged--but introducing such a review would shift the model from the “norm” to a safety net for the poorest, at the risk of the middle classes turning away from it, researchers concluded in 2021.
The mayor of Vienna will be in Luxembourg next week to talk about this innovative model, as Vienna is Europe’s largest property owner.
This article in Paperjam. It has been translated and edited for Delano.