AK against the real estate sector – experts argue: how does affordable housing work?

The housing sector is a huge construction site, experts agree: high demand, increasing financial burdens for people, not enough cheap supply. But then it doesn’t happen anymore, and that’s part of the problem. “Too many new apartments have been built in recent years, but the wrong ones. Everything was invested in concrete gold for investors, which caused land and construction prices to overheat and pushed non-profit housing off the market,” says Thomas Ritt, housing expert at the Chamber of Labor. “That’s simply wrong,” replies Gerhard Gollenz, chairman of the real estate management company. “There is no wrong way to build. The investor apartments have also been sold and rented out, there are no vacancies.”

“Nonprofits need to build more”
On the contrary, Gollenz is threatening a major shortage because far too little is being built. This year, things are still mild because new construction production is “only” falling by 13 percent, “from 2025, completions will fall by as much as 80 percent,” warns the real estate chairman. According to the latest estimate from the sector, 42,640 units will probably be built this year, then only 31,800 in 2025 and even 13,160 in 2026. In concrete terms, according to this forecast, fewer than 3,500 of the still affordable subsidized rental apartments will soon come onto the market, instead of around 11,000. The main reason is that the non-profit housing developers are not active enough. “As commercial housing developers, we have already contributed the largest share of new construction, but that is actually wrong. “It is only possible if the non-profit organizations also build a lot.”

AK expert even notes ‘oversupply’
AK expert Ritt sees the coming years as much less dramatic: “Yes, the number of building permits has collapsed, but these are permits for homes that we don’t need anyway. Professional investors are now moving away from concrete gold and prefer to buy government bonds again. However, many of the buildings that have already been approved are only now being completed, which means that the oversupply will actually increase.” It is also quite good that the overheating of the brewing industry is decreasing. “Construction prices have risen much more than the actual construction costs, which the economy always cites as the reason for high house prices. Since 2022, there has been a huge gap, the prices charged have risen 20 percentage points above the costs!”

It is also a good thing that the overheating of the brewing industry is decreasing. “Construction prices have increased much more than the actual construction costs, which the economy cites as the reason for expensive apartments. Since 2022 there has been a huge gap, the prices charged have increased 20 percentage points above the costs!”

Bureaucracy as a price determining factor
But according to the real estate sector, this is partly the fault of bureaucracy. “The regulations are excessive and no longer affordable. We need the standardization of building standards throughout Austria, but no further unnecessary standards. In Styria, for example, we have “A new density regulation, for example, means that 140 m2 of rentable living space can be lost in an apartment building, which of course makes all other apartments more expensive,” says Gollenz, giving a concrete example.

AK specialist Ritt sees other levers: the spiral of rising property prices must be stopped by the public sector, which transfers its ÖBB land, barracks, hospitals, etc. exclusively to subsidized buildings. “This allows for rents of around 8.5 euros per m2 with a purchase option.” A ceiling for permitted rent increases of two percent per year is also defensible. “There was such a restriction on the income of homeowners in half of Europe.”

Orders for the construction sector are falling away
But it is not only home seekers who are suffering from high rents and purchase prices; orders are collapsing throughout the construction sector. In a ‘More Home’ initiative, dozens of companies are now urging the government to take swift action. “This is also socially relevant, because the achievable dream of owning an apartment or house is a social glue that is now crumbling,” warns Torsten Kreft, head of the construction market hagebau. At the same time, unemployment in the construction sector, the trade in building materials and production is growing rapidly. “If we lose these employees, they will not come anymore,” says Gunther Sames, CEO of construction materials manufacturer Ardex.

VAT exemption for consumers
You therefore have five concrete demands from politicians. Consumers should receive a temporary VAT waiver for orders up to 100,000 euros for renovation or the creation of living space for a few years. “This has already been introduced for PV systems and has proven itself immediately,” says Sames. Commercial builders needed greater possibilities for tax depreciation.

The second point is earmarking housing subsidies from employee taxes and increasing them. Other concerns include loosening lending guidelines and simplifying the jungle-like financing programs and building codes, which would then have to apply uniformly to all states.

More pragmatic standards would also help. “If we can use a 30-inch brick instead of a 50-inch brick, the wall will cost 40 percent less,” the experts say. The industry is also working internally to make construction cheaper. This means tilers can lay the wires for electric underfloor heating at the same time; they then just have to connect it.