Inflation has a firm grip on Austria. If the government continues to refrain from a rent ceiling, there is also a threat of much higher expenditure here. Experts assume a price increase of 30 percent.
The union-affiliated Momentum Institute warns of further significant cost burdens for tenants. Benchmark rents have already risen by 14.4 percent in the past two years and could rise by a total of 28 percent in 2025, the institute warns, referring to forecasts from the Economic Research Institute (Wifo).
For 2021, an average reference rent of 480 euros per month was used. In 2022, reference rents rose by 5.8 percent and this year by another 8.6 percent. “An increase of 72 euros. If benchmark rents are not slowed down, the rent will rise to 613 euros per month in 2025,’ says Momentum economist Alexander Huber.
It would be much cheaper for tenants if there was a rent brake this year, with rents only allowed to rise by a maximum of two percent per year. Then the above rent would rise to only 539 euros in 2025. “Compared to 2021, that would be an extra monthly cost of 60 euros,” Huber calculated today. He recalled that 80 percent of all rental income would go to the wealthiest tenth of households.
Targeted support
Designated IHS boss Holger Bonin also commented on the rent brake. He is against intervention in rents because it is “always a problem to intervene in prices and markets because it affects supply”. “Rental price restrictions are pointless if fewer apartments come on the market and the others are rented out even more expensively. Those who can no longer pay the rent can better receive targeted support,’ says the economic researcher about the ‘norm’. He sees action on the automatic value retention clause in the leases, because they are based on the consumer price index, “and that is not plausible, that is not the right index”.
High inflation now ‘dangerous’
Wifo boss Gabriel Felbermayr said yesterday in the “ZIB2” given the threat of benchmark rent adjustments in July that it is important that everyone contributes to the euro zone’s inflation target of two percent. That would also mean that prices as a whole may only rise by this two percent. He welcomes considerations for stretching right value adjustments over time.
“I think we need to think about it further”, it is already “dangerous” if high inflation is allowed to continue. A rent brake would be “sensible”, because otherwise collective bargaining wages would have to rise more sharply in the autumn than in the rest of Europe, because inflation is also higher than the EU average, Felbermayr warned on Monday evening.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
