Increases in Housing Costs in Austria Have Grown At Twice the Rate of Inflation

Austrian News Brief: March 2008

Austrian households now spend every fourth Euro on housing, according to a new study by Kreutzer, Fischer and Partner Consulting, GmbH, in Vienna.

And while increased energy costs, up 31.7%, are certainly a factor, they are far from the only one and not the largest. The increases include dramatically higher costs for garbage removal (+55.4%), rents (+41%), sewage (+40.6%) and water supply (+21%), against a background inflation rate of 20.1%.  In 2006, the average Austrian household spent €875 for housing costs, against an average monthly gross income of €3,500.

These increases in fees reflect a tendency “to use community infrastructure as a source of revenue,” the study’s authors suggested, in a Nov. 16 article in Der Standard.

An additional explanation is the cost of new construction, now an average of €1,550 per spare meter, and similar increases for renovation. The average Austrian household carries a housing loan of €24,000, the study said.

Additional pressure on costs was traced to the €2.5 million annual housing subsidies, of which 80% goes for new construction, rather than renovation. Of this, most goes to large construction firms building public housing, with too little review of quality and efficiency, or application of modern construction techniques, Andreas Kreutzer who directed the study, told the Austrian daily Die Presse.

“The construction companies earn money only when they build. Renovation doesn’t interest them,” Kreutzer said. “The results are higher maintenance fees in the older buildings.”

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