With the ‘housing and construction offensive’, the government promises that real estate will become affordable again and the construction sector will be stimulated. So far so good. But how exactly should this project be financed? Parliament’s budget service, which is independent of the parties, has now scrutinized the package.
However, this turned out to be more difficult than initially expected – because the government parties remained silent about the financial effects of the individual measures, the ‘Vorarlberger Nachrichten’ reported on Tuesday.
According to the newspaper, budget office economists complained that the impact on taxpayers was unclear. Parliament’s budget service has estimated that around €2.5 billion will be distributed for this package in 2027. And maybe it needs another package.
The economic impact of the housing package depends on new investments in housing construction: “In its March forecast, the economic research institute expects that gross fixed capital formation will decline by a total of 2.0 percent in 2024 and by 2.0 percent again in 2025 .2 percent will increase. . In construction investments, the expected decline is 4.0 percent in 2024, followed by an increase of 1.5 percent.”
Expect slightly price-increasing effects
However, the budget service looked more critically at other measures: “For example, the craft bonus and the suspension of additional costs for owning a home can be assumed to have high deadweight effects and therefore a low economic impact. But according to economic research institute Wifo, housing subsidies are expected to have little economic impact in the current year and a modest plus in 2025. The Institute for Advanced Studies (IHS) expects slightly larger effects on the economy. But: “Since the effects of the measures sometimes only become visible with a delay, there is a risk that the economic stimulus package will have a procyclical effect in the medium term.”
The budget office noted that the housing package will further increase land consumption. However, renovations and the established restrictions on dense residential buildings and multi-storey residential buildings would have a dampening effect. “The obligation to set up photovoltaic systems supports the expansion of renewable energy,” the budget office also announced. When it comes to real estate prices, greater supply is also accompanied by greater demand, which means that slightly price-increasing effects can be expected.
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.
