Affordable housing in Austria and Vienna: Key policy instruments, challenges, and lessons to learn for other countries and cities

This research brief, published by the Progressive Politics Research Network, explores the affordable housing systems in Austria, particularly focusing on Vienna. The author, Gerald Koessl, emphasizes how Austria's distinctive housing policies have garnered international attention, highlighting the country's effective strategies in addressing the growing affordability crisis faced by many nations.

In Austria, approximately one in four households lives in rented homes provided by limited-profit or public housing, which is the second-highest ratio in the European Union. In Vienna, this figure rises to around 40%, showcasing a substantial segment of the housing market that offers affordable and secure long-term options. The research discusses the institutional framework that supports this housing system, including limited-profit housing associations (LPHAs), which play a crucial role in maintaining affordability.

The rental market in Austria and Vienna consists of various housing providers, including municipalities and private landlords. About 76% of Viennese households rent their homes, compared to 43% across Austria. Notably, 24% of all households rent from limited-profit housing associations or municipal providers. This model significantly differentiates Austria from other countries, allowing for a high percentage of non-speculative housing options.

Housing costs vary across sectors, with average monthly rents of €590 in the LPHA sector, €480 in municipal housing, and €770 in the private rented sector (PRS). The regulated rents in the PRS are significantly higher, with new builds presenting even steeper price tags. LPHAs contribute around 15,000 to 16,000 new homes annually, primarily in urban areas like Vienna, which highlights their vital role in the affordable housing landscape.

Research indicates that the presence of cost-based housing can reduce for-profit rents. For instance, for every 10% increase in cost-based housing, market rents decrease by approximately €0.40 per square meter. This model not only supports affordability but also enhances tenants' purchasing power, contributing positively to the economy. Public funding, primarily through low-interest loans, plays a crucial role in supporting affordable housing initiatives.

Public funding for housing, managed by regional authorities, has been essential in constructing and renovating homes. In Vienna, an average of €465 million is spent annually on housing initiatives, with a significant portion allocated to new construction. Conditionality criteria ensure that public funds are used effectively, reinforcing energy efficiency and capping rents.

The Austrian model provides valuable insights for countries grappling with housing affordability. By embedding legal frameworks that prioritize limited-profit housing, governments can maintain affordability without relying on speculative market mechanisms. Instruments like the Wohnfonds Wien and zoning categories for subsidized housing ensure that land is available for affordable developments, capturing land value for public benefit.

Austria's approach to affordable housing showcases the potential of decommodified systems supported by public policy. The integration of legal, fiscal, and planning instruments fosters sustainability and resilience in housing provision. As countries across Europe seek sustainable housing solutions, the lessons drawn from Austria's experience can inform and inspire future policies aimed at creating more accessible housing markets.