A study commissioned by the City of Vienna found a correlation between the market share of non-profits and private rents.
Compared with the rent levels of private rented apartments, tenants of non-profit building associations save a cumulative total of around 1.2 billion euros per year – the Economic Research Institute (Wifo) already found this two years ago in a study. For a second part of this study commissioned by the City of Vienna, Wifo, together with the Federation of Nonprofit Building Associations (GBV), has now also looked at the impact of the nonprofit sector on the private housing market. Specifically, the question was whether the more favorable rents in cooperative apartments also have an impact on rents in private rental apartments.
The short answer: yes, says Wifo housing expert Michael Klien. “The stronger the competitive pressure from nonprofits in the housing market, the lower the premium from private providers.” So the higher the share of nonprofits in a given regional housing market, the stronger their price-dampening effect was, or so the results would suggest.
50 years of data analyzed
Klien and the other team of authors, which also included Gerlinde Gutheil-Knopp-Kirchwald, head of the association’s housing department, compiled data from the past 50 years, including from Statistics Austria (microcensus, register censuses, housing statistics), to document the shift in market shares between 1971 and 2011: In Waldviertel, for example, the share of the non profit sector grew strongly during this period, while the private sector declined – in most Tyrolean districts, the reverse was true. Across Austria as a whole, however, the nonprofit share increased sharply from 1971 to 2020, from nine to 17 percent of the total market and from 18 to 40 percent of the rental housing market.
Large regional differences
However, the regional distribution showed large differences. A few regions were also found where there was no price advantage of the nonprofits at all or where even private housing was cheaper. This was particularly the case in low-density areas in Upper and Lower Austria and in Vorarlberg. In these locations, however, the nonprofits would score points due to their quality advantage thanks to a relatively young rental housing stock, the study says. The private rental housing stock tends to be older and of lower quality.
And in general, the quality of housing in Austria has risen significantly since the 1960s with the non-profits. A “quality competition” between the for-profit and the non-profit sector has emerged, “whereby the non-profits were and still are clear quality drivers,” the study says. In Vienna in 1971, for example, about one-third of all private rented apartments were still so-called Bassena apartments, with no toilet or water in the apartment. “This substandard was virtually non-existent in the non-profit sector at that time,” explains Baringer, head of the association. (Martin Putschögl, 23.5.2023)
Source: Der Standard – translated from the German
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