Between 2010 and 2020, rents in Austria rose significantly faster than inflation. This was the result of calculations by the Viennese think tank Agenda Austria. While general prices increased by 19.8 percent during this period, rents rose by an average of 44 percent per square meter, according to a calculation by Agenda Austria.
Housing costs have risen across all segments, whether on the private housing market, in cooperative housing or in the many municipal buildings. This is mainly due to the increased demand and the simultaneous increase in real estate prices. But not only: “Many rental contracts contain an adjustment for inflation. When inflation rises, rents rise. When rents go up, inflation goes up. This cycle will make housing more expensive in the future,” warns Agenda Austria economist Hanno Lorenz. “Housing costs will only fall when supply grows faster than demand and monetary policy normalizes,” says Lorenz.
Although the ultra-loose monetary policy did not lead to an increase in consumer prices – until the corona pandemic – it did lead to a significant increase in real estate prices. Since the fourth quarter of 2020, residential property prices in Austria have risen in double digits, and by 11.7 percent in the second quarter of 2021. However, real estate prices are not included in the basket of goods and are therefore not taken into account when measuring inflation. The extent to which real estate prices are reflected in rental prices also depends on the legislation.
