Austrians unimpressed by rising rents

Almost one out of five Austrians consider investing in real estate within the next 12 months, according to an investigation.

Public opinion agency Integral found that 19 per cent of Austrians planned to spend money on properties in the coming 12 months – five per cent more than in the previous quarter. The research group’s check also shows that 16 per cent considered investing in gold. Around two in three Austrians think about opening a savings account in the next 12 months – despite extremely low interest rates and high inflation.

News that the number of people considering buying real estate is increasing comes as a surprise since purchase prices and rents are on the rise. Real estate information platform Find My Home recently spoke with Viennese real estate agents to find that flat rent rates were expected to soar further in 2012 and the years to come.

Experts said that high demand for medium-prized apartments and very few offers in some areas of the capital would intensify the upward price cycle. Other industrial regions of the country will experience similar developments, according to analysts – who also warned that prices would not remain stable in rural regions either.

Vienna’s Innere Stadt and Döbling districts, Salzburg and Kitzbühel in Tyrol are currently the most expensive location for houses and rented and owner-occupied flats in Austria. Austrians spent 8.8 billion Euros on the purchase of properties and owner-occupied flats in 2009, up by more than 10 per cent compared to 2008. More than 45,000 properties were sold in 2009.

The Federal Labour Chamber (AK) appealed to real estate agents to stop charging provisions and higher rents for apartments in a good location. AK real estate sector experts pointed out that Austrians were challenged by rising taxes and charges for public services like garbage disposal services and the supply with tap water.

Rents for apartments rose by 34.5 per cent between 2001 and 2010, according to AK examinations. The chamber said inflation increased by only 21 per cent during the same time span. The federal parliament halved the value-added tax (VAT) on drugs in 2008 as a reaction to the crisis and rising inflation – and because of an approaching election. In the same parliamentary meeting, delegates also agreed about scrapping tuition fees. All parties but the conservative People’s Party (ÖVP) approved the end of the charge for university students.

Now the ÖVP and its coalition partner, the Social Democrats (SPÖ), are understood to be about to set up a tax of 25 per cent on real estate deal profits. The parties also want to tax people who make money by changing the categorisation of their properties from agricultural land to building land. Vienna’s SPÖ-Greens coalition may be quicker in introducing such a charge. The city government is engaged in a heated debate after Greens Deputy Mayor Maria Vassilakou suggested a 50 per cent higher taxation rate than the SPÖ’s suggested 25 per cent. Helmut Mödlhammer, who heads the Austrian Association of Communities, appealed to the provinces to abstain from “engaging in a rally about who is first to set up such a tax.”

The Freedom Party (FPÖ) suggested a luxury tax on expensive apartments and cars could help restore the state budget – which is burdened by debts as high as 72.2 per cent of the gross domestic product (GDP). The opposition party said banks could be burdened with higher taxes as well. However, the FPÖ underlined that the government’s focus must be on raising efficiency. It labelled the planned debt limit as a placebo and a superficial attempt to show determination in protecting Austria from an economic hurricane.

The FPÖ and its right-wing rival, the Alliance for the Future of Austria (BZÖ) said nothing had kept SPÖ and ÖVP from lowering the budget deficit in the past years. The BZÖ said the government was “too cowardly” in carrying out convincing reforms. Both opposition parties held debt limit talks with government representatives to no avail.

The Greens said yesterday (Tues) Austria’s tax system must become fairer. It said 13 billion Euros could be saved by 2017. Around three billion Euros should be spent on green jobs, public education and measures which lowered the financial pressure on people with low and medium incomes. The party also suggested the creation of an inheritance tax which should only be charged on large sums and assets of high value.