Unaffordable housing

Lack of demand is now causing prices to tumble

Until recently, the rent for a terraced house in St. Margarethen was 1,600 euros. Now it costs around 1450 euros.

(Bild: NEBAU)

1600 euros a month rent for a terraced house in Burgenland - built by a non-profit housing association. Who is supposed to pay this exorbitant price? Prices are now being lowered due to months of lack of demand. Criticism of the provincial government is not spared either. 

A home in the countryside is no longer affordable for many Burgenlanders. In order to create affordable living space, non-profit housing associations such as "Neue Eisenstädter" (NEBAU) are building terraced houses and semi-detached houses that can be purchased by renting - for example in Zagersdorf, Purbach and St. Margarethen. However, the total rent of the properties is so high that the population feels cheated. After all, housing finance experts preach that rent should make up no more than 40 percent of household income! For a young family with two small children and only one parent working full-time, this is practically impossible with a median household income of 2500 euros net per month. So it's no wonder that there is growing resentment in the communities and talk of "outrageously expensive speculative buildings" that would only contribute to "unnecessary housing vacancies".

"That's not true," says Bernd Gerdenitsch, Managing Director of NEBAU. Many projects are already occupied. In addition, a "consistently positive rental trend" can be observed. Nevertheless, he takes such feedback and harsh criticism from the public very seriously. He has no other choice if he wants to keep financial losses for his company as low as possible.

NEBAU's terraced houses in Purbach. If no tenants move in over a longer period of time despite the price reduction, the costs will probably have to be reduced again.

(Bild: NEBAU)

Encouraging demand
"In order to increase the attractiveness of the properties" and "make them affordable for more households" despite high inflation, uncertain interest rate trends and increased land and construction costs, prices have now been reduced. For a terraced house in St. Margarethen, you "only" need to pay EUR 1450 per month instead of the previously estimated EUR 1600 total rent. This does not include electricity and heating costs.

"We have also reduced the monthly rent in Purbach by 135 euros and the financing contributions by 22,000 euros. We want to send out a positive signal and hope that we will rent out our units as quickly as possible," says Gerdenitsch. And what if, despite the price reduction, demand leaves something to be desired and no tenants move in? Will the costs then be reduced even further? 

We do not expect demand to fall short of expectations, as we continuously analyse the market situation and assume that interest rates will stabilize. On the contrary, expert forecasts suggest that demand will rise again when the so-called KIM regulation expires in mid-2025.

NEBAU-Geschäftsführer Bernd Gerdenitsch 

Bild: NEBAU

Is the state government to blame?
In his eyes, the state government is partly responsible for expensive housing. Since 2021, it has "no longer provided housing subsidies" to the four non-profit building associations, claims Gerdenitsch: "Housing subsidy loans from the state could significantly reduce the financing contributions and rents for future projects, as this would reduce the need for additional bank loans."

In Zagersdorf, too, you have to pay around 1,300 euros in rent for 112 square meters. Until recently, it was 1500 euros.

(Bild: NEBAU)

This is countered by the Housing Minister
State Housing Councillor Heinrich Dorner does not take this criticism lying down: "The non-profit building associations have been provided with housing subsidy budgets for multi-storey housing for years. This has also been clearly shown in the state budgets of recent years. Furthermore, the housing cost cap has been extended until mid-2025. In order to freeze the level of rents, the state provides ten million euros per year as callable interest subsidies for GBV. However, Neue Eisenstädter has not yet submitted any applications!"

In addition, state guidelines are available for drawing down federal housing funds. Specifically, 26 million euros for the years 2024 to 2026 for new construction projects and eight million euros for renovation projects. "NEBAU has already been promised funds," clarifies Dorner.