Hypostat 2015

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EU 28 Country Reports Austria By Wolfgang Amann, Institut für Immobilien, Bauen und Wohnen Gmbh and Karin Wagner, Oesterreichische Nationalbank Macroeconomic Overview GDP grew by a 0.4% in 2014 (in real terms, seasonally adjusted). The Austrian economy is expected to grow by only 0.7% in 2015. Following a positive first half of 2014, the Austrian economy started stagnating in the second half of the year. A mixed picture for the Austrian economy emerges from the indicators at the beginning of 2015. The confidence indicators show a significant worsening of sentiment among domestic consumers and businesses in February. But this decline appears to exaggerate the current situation somewhat, since the framework for an economic upswing is certainly intact. In addition to a positive fourth quarter in 2014, growth of industrial output was also slightly positive in January 2015. The prospects for consumer spending have also improved. Real wages have risen more than at any time in over 5 years due to the slowing of inflation. Overall, the improvement in real wages should result in a moderate economic upswing in Austria. Austria’s GDP is likely to keep underperforming its euro zone peers. A tax reform, legislated on 16 June 2015, will enter in force on 1 January 2016 and reduce income taxation significantly. External conditions improved owing to stronger growth prospects in the euro area. The strong appreciation of the Swiss franc improves prospects for the Austrian tourism sector. The real estate transfer tax will change to a staggered system under the newly announced tax reform with a rate of 0.5% for sales prices of up to EUR 250,000; a rate of 2% for amounts ranging from EUR 250,000 to EUR 400,000; and 3.5% (which is currently the default rate) for any higher amounts. At the same time, a new assessment base will apply, reflecting the market value rather than the three-fold property value as under current provisions. Moreover, firms will benefit from a tax allowance for real estate transfers of up to EUR 900,000 as well as a staggered corporate system: a rate of 0.5% for amounts of up to EUR 1.1 million; a rate 2% for amounts of up to EUR 1.3 million; and a rate of 3.5% for higher amounts. Housing and Mortgage Markets Residential construction in Austria remains subdued. Real housing investment advanced slightly in 2014 (+0.4%) after having contracted in the two previous years. A rather dynamic first half year (thanks to mild weather conditions) was followed by a slowdown in the second half of the year. Production output and the number of annual hours worked in construction also point to weak developments in this segment. For the first quarter of 2015, survey results released by the European Commission (“Home improvements over the next 12 months”) signal a further contraction. The slowdown in residential property prices first observed in mid-2014 did not ease throughout the second half. While price pressures had inched up to +4.5% y-o-y in the first half in Austria, they moderated considerably in the second half. In the second half of 2014 prices declined by 0.4%. In Vienna, property price growth has been steadily subsiding since the fourth quarter of 2013, resulting in a +1.0% y-o-y in the fourth quarter of 2014. Compared with the beginning of the year 2014 (Q1: +8.1%), price increases had therefore decelerated markedly. Quarter on quarter, the contraction registered in the third quarter (–2.5%) was followed by a slight upward movement in the closing quarter (+1.1%). Austrian legislation on residential tenancy is characterised by a high degree of complexity: different provisions apply depending on the date when a building was completed or when the lease was signed, or depending on the type of subsidies granted. In general, residential tenancy law provides a fairly high level of protection for tenants. Moreover, the share of social rents is quite high in international comparison, in a market with a high share of rented housing: 20% of tenants live in public housing apartments (“Gemeindewohnungen”), 40% in homes erected by limited-profit developers of affordable housing, and just 40% of the tenants rent from private landlords. In this environment, the expected return of renting is quite low for private investors. Thus, both the high share of social rents and the high share of regulated rents seem to have dampening effects on rental and property prices. Housing loans to households continued to expand at a moderate pace also in the first few months of 2015. In April 2015, the annual growth rate of housing loans extended by Austrian monetary financial institutions (adjusted for reclassifications, valuation changes and exchange rate effects) came to 3.1%, the same value recorded in October 2014. This slight increase was again above all due to long-term loans (i.e. loans with a maturity of more than five years). The growth of housing loans with a medium-term maturity (1 to 5 years), by contrast, contracted. In Austria foreign currency loans are still quite popular. Even though the currency risk for housing loans granted to households has decreased noticeably in the past years, it still remains high. Almost all foreign currency-denominated housing loans outstanding are denominated in Swiss franc (close to 97%). Furthermore, the share of variable rate loans in total housing loans in Austria is very pronounced by international comparison and continues to rise, which implies considerable interest rate risk. As regards Austria’s housing policy, regulated rents are adjusted to CPI every two years (Richtwerte, for old stock built before 1945, and rented out after 1994) 1 or after reaching a threshold of 5% (Kategoriemiete, for old stock built before 1945, and rented out before 1994). Following this mechanism, the last adjustment took place in April 2014. These increases affect around 330,000 households. The key characteristics of Austria’s housing policy are still its focus on regulated (i.e. limited profit) rental housing and its financing tools. In 2014 the main emphasis was also put on state and regional supply-side subsidies, which aim at fostering affordable housing. Public subsidies accounted for around 0.9% of GDP, including a wide range of policy tools. The most important is the “Wohnbauförderung” of the Austrian provinces, with a focus on subsidies on bricks and mortar and subsidiary housing allowances. The financing system of the “Wohnbauförderung” achieves its efficiency through close interaction with the system of limited profit housing construction and additional capital market financing instruments. Social housing supply follows a generalist eligibility approach with high income limits. Hence Austrian housing policy still promotes integrated rental markets. Other subsidy tools are minimum income schemes coming from regional social budgets, subsidies for “Bausparkassen” and “housing bonds”, very limited fiscal subsidies and a reduced VAT rate for rental housing. Overall state expenditure on housing is below most other European countries, such as UK, France or Netherlands. At the same time the outputs are quite remarkable in respect of quality of housing, affordability and aspects of social integration. Housing is well positioned in the political agenda and is subject to most election campaigns on regional and federal level. Despite this, the plan of the current federal government to produce a new rent law failed due to irreconcilable differences in basic positions. 1 In 1994, the system of regulated rent (Richtwertmieten) replaced the system of rent that had been based on rent ranges for housing categories (Kategoriemiete). Since then, surcharges or discounts are calculated for regulated rents to take into account a rental property’s furnishings or location. Regulated rent is the typical rent system applicable to housing built before 1945, and applies to all rental contracts for rental property in such buildings concluded after March 1994. 24 | 2015 EMF HYPOSTAT
EU 28 Country Reports Austria 2013 Austria 2014 EU 28 2014 Real GDP growth (%) (1) 0.3 0.4 1.3 Unemployment Rate (LSF), annual average (%) (1) 5.4 5.6 10.2 HICP inflation (%) (1) 2.1 1.5 0.6 Outstanding Residential Loans (mn EUR) (2) 87,622 90,701 6,909,057 Outstanding Residential Loans per capita over 18 (EUR) (2) 12,602 12,930 16,787 Outstanding Residential Loans to disposable income ratio (%) (2) 44.3 45.1 n/a Gross residential lending, annual growth (%) (2) 2.8 6.3 n/a Typical interest rate on new residential loans, annual average (%) (2) 2.4 2.4 3.4* Owner occupation rate (%) (2) 57.3 57.2 n/a Nominal house price growth (%) (1) 4.6 3.2 2.2 * Please note that this value is the simple average of the typical interest rate of the EU 28 countries. Sources: (1) Eurostat (2) European Mortgage Federation – Hypostat 2015, Statistical Tables. Austria Fact Table Entities which can issue mortgage loans: The market share of the mortgage issuances: Proportion of outstanding mortgage loans of the mortgage issuances: Typical LTV ratio on residential mortgage loans: Any distinction made between residential and non‐residential loans: Most common mortgage product(s): Typical maturity of a mortgage: Most common way to fund mortgage lending: Level of costs associated with a house purchase: The level (if any) of government subsidies for house purchases: Mortgage lending is mainly financed via banks and Bausparkassen. Not available Bausparkassen holds the biggest proportion of residential mortgages in Austria. In combined with the Saving Banks Group, Baussparkassen makes up one of the biggest banking group in Austria representing the largest markets share of the mortgage market. According to Oesterreichische Nationalbank’s 2014 Financial Stability Report, the LTV is around 60%. Not available Both variable rate loans and foreign currency loans are common mortgage products in Austria, but variable rate loans remain the most popular choose. Mortgages typically have a maturity rate of 25–30 years. Mortgage funding in Austria is mainly deposit-based. According to the IMF covered bonds only made up 7.1% of the outstanding mortgages in 2008, meanwhile securitisation as a way of funding is even less popular making up only 3.1%. In addition to the cost of borrowing, one should add a mortgage fee and VAT. According to the International Union for Housing Finance, government housing subsidies accounted for 1% of the GDP in 2010. The Wohnbauförderung, the so-called subsidiary scheme, mostly support low-income and some first time buyers. 2015 EMF HYPOSTAT | 25
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Page 3 and 4: Contents Foreword..................
Page 5: Foreword Finally, in the spirit of
Page 8 and 9: Housing and Mortgage Markets in 201
Page 17 and 18: Mortgage Lending in Foreign Currenc
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EU 28 Country Reports United Kingdo
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Statistical Tables A. The Mortgage
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Statistical Tables - The Mortgage M
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Statistical Tables - The Housing Ma
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Statistical Tables - Funding of the
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Statistical Tables - Funding of the
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Statistical Tables - Macroeconomic
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Statistical Tables - Macroeconomic
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Annex: Explanatory Note on Data A.
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