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COST OF LIVING

EXPLAINED: Why is finding housing in Salzburg so difficult?

Rent prices in Salzburg are increasing more than anywhere else in Austria. Here's what you need to know.

The Austrian city of Salzburg. Photo by Dimitry Anikin on Unsplash
The Austrian city of Salzburg. Photo by Dimitry Anikin on Unsplash

The city of Salzburg is experiencing a housing crisis, fuelled by property investors, limited building space and increasingly tourism-focused infrastructure.

“In the last five years, prices have risen enormously. Much more than income levels,” says Inge Strassl, project leader for housing research at the Salzburg Institute for Housing and Regional Planning (SIR).

In the city of Salzburg, locals and newcomers alike are running up against sky-high prices and limited options when it comes to finding an apartment or home. The city’s housing crisis is the result of a slew of factors driving up demand, even when it seems there is no shortage of living space in the city and surrounding region.

“It’s not a question of whether we have enough apartments—but they aren’t always in the right place,” Strassl told The Local. “The main problem is that it’s becoming too expensive for the average person.”

Since at least 2005, the state of Salzburg has topped the charts for rent prices compared to other Austrian states, according to SIR’s latest report. In that time, Austria has seen an average rent increase of 57 percent, bringing a typical Salzburger’s rent from 6.50 euros per square meter up to 9.90 euros by 2020.

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For those looking to buy, the leap in property value was even more stark. From 2009 to 2019, the sales price for new homes inside the city jumped by 70 percent, while the price tag on existing homes nearly doubled.

Today, a 150 square meter apartment or house on the city outskirts can sell for one million euros or more.

New tenants face elevated costs

Compared to the rest of the world, Austria’s rent-to-income ratio is fairly middling—about 20 percent of the average Austrian’s income went to rent in 2019, according to a recent OECD study.

That’s higher than Germany and the EU as a whole, but lower than France, Italy, Switzerland and the United States.

What the numbers don’t show though, is which groups have access to more affordable housing, and how much more money new tenants are paying compared to the old. On this issue, Salzburg is the perfect case study.

Bernhard Gugg, a housing researcher with SIR, told The Local that new tenants can expect shorter rent contracts and more frequent price hikes than in previous years.

READ MORE: Is it better to buy or to rent property in Austria?

“Around two-thirds of new rent contracts are set for three years,” Gugg says. “After it expires, landlords can actually raise the price again.”

According to Gugg, the current rent price on the market is around 17 euros per square meter, including upkeep. In Austria, it’s typical for a landlord to charge three month’s rent as a security fee, while real estate brokers often charge another two month’s rent for their services. 

That means the upfront fee to move into a two-room apartment in Salzburg could total up to 5,400 euros for the first month.

Inaccessible subsidised housing

Gugg also says that newcomers, especially non-Austrians, have trouble accessing Salzburg’s more affordable subsidised housing, which makes up approximately one quarter of the city’s housing stock.

“That’s not available for internationals, or for people who move here for studies or work,” Gugg says. Only five-year residents of the city are eligible to apply.

But even locals face a long waiting list. According to Strassl, low turnover in the city’s subsidised housing stock is further exacerbating Salzburg’s housing crisis.

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“The problem is that people don’t move out of these apartments again,” Strassl says. “They stay, and want to live there forever. So there is no exchange.”

As a result, groups that normally rely on lower-priced housing for their first apartment or home have to look elsewhere—and that often means settling for cramped or lower-quality housing on the private market.

“It’s the younger population and the young families,” Strassl says, that are feeling the brunt of the impact—especially immigrants. She has come across many immigrant families with several children, often having to live in small, two-room apartments.

“The private rent is so high that it’s not possible to save a lot of money,” she says. “It’s creating a split—the gap is widening,” she says, between renters and owners.

A focus on tourism is a major reason why the cost of living is so high in the Austrian city of Salzburg. Photo by zhang xiaoyu on Unsplash

A focus on tourism is a major reason why the cost of living is so high in the Austrian city of Salzburg. Photo by zhang xiaoyu on Unsplash

Empty buildings and restricted space drive up demand

Salzburg’s housing availability is also being diminished by a recent boom in the purchase of property for investment—houses and apartment buildings that investors often leave empty because they generate income all by themselves, without the need for tenants.

The city’s real estate sites are full of advertisements geared toward investors, complete with annual profit estimates. One listing on the housing board run by Salzburger Nachrichten is titled: “Apartment package: 4 top-rented investment apartments with a yield of 2.9%.”

In order to capitalise on the profits, Gugg says, private building companies are snapping up land in a city with restricted space.

“What’s quite difficult in Salzburg is that you really don’t get a lot of new land for any kind of development—not just housing,” he says. That steep competition makes it hard for affordable-housing associations to recoup their costs and keep prices low for residents.

According to Strassl, many properties in the city, old and new, are bought up by small investors looking for a place to park their money instead of the bank.

“In the city of Salzburg, you can be sure that [a property] will not lose it’s worth,” Strassl says. “Of the people who buy them, not all rent them again, so there are a lot of apartments now that are sold and not used.”

A 2015 SIR study found that about 3,500 viable living spaces in the city remain vacant year-round, inaccessible to the public. While that’s only about 4 percent of the available supply, it’s indicative of a growing market, that—combined with Salzburg’s restricted building space—is pushing some residents out.

Renting in Austria: When can my landlord increase the rent, and by how much?

A blessing and a curse

There’s one final factor putting pressure on Salzburg’s housing market, wrapped up with all the rest: Salzburg’s allure for tourists, vacationers and second-home buyers.

The city’s “attractiveness is not only a blessing for Salzburg, but also a curse,” reports a 2019 study out of the Salzburg University Geography Department.

Salzburg’s charming surroundings, comfortable amenities and cultural tourism draw millions of visitors over the course of a normal year. In 2019, Salzburg hosted three million overnight stays—approximately 8,200 additional residents each day of the year in a city of 155,000. 

According to the study, tourism in Salzburg has captured a large swath of housing, including vacation homes and short-term rentals posted through portals like Airbnb, which often remain partially empty during the year. At least 17 percent of living spaces in the city are secondary residences, while the number of short-term rentals is hard to quantify.

What’s clear is that Salzburg’s city centre is remarkably vacant of local residents. The resident population there fell 15 percent in the ten years leading up to 2019, says the study, as the city’s changing infrastructure increasingly accommodates tourists.

Strassl says the price jumps and high demand haven’t stopped there. “It’s extreme in the city, but it’s also coming around in the surrounding area. In the whole region of Salzburg, you will not find a really cheap place.”

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MONEY

EXPLAINED: How to claim your €150 energy discount in Austria

Austria is sending out "energy vouchers" to some four million households, in an effort to cushion rising living costs in the country.

EXPLAINED: How to claim your €150 energy discount in Austria

By the end of May, around four million households in Austria will receive a voucher worth € 150 to discount their energy bills. 

The one-off payment is part of a larger package by the federal government to assist residents as the country faces soaring energy prices and increasing inflation, as reported. 

Around one million vouchers will be sent each week, and each primary residence should receive a voucher by post by the end of May.

The bonus is directly connected to the electricity supplier. It can be redeemed by single-person households with an annual income of up to € 55,000 or residences with more people and up to € 110,000 yearly income.

voucher for energy costs in austria

The website to redeem the energy voucher can also be found in English.

How do I redeem the voucher?

The € 150 discount voucher will be mailed to households and can be redeemed online. People entitled to the discount can scan the QR code on the voucher or go to the official government page, which also has an English version.

READ ALSO: Is Austria set for a gas price hike – and what can you do to avoid it?

You are then prompted to enter the data of the energy customer and asked to keep the voucher number and check number so you can check the status of the application.  

According to the official page, consumers should receive a credit worth €150 with their energy provider’s annual or final invoice. 

The voucher can also be redeemed by post. You need to confirm your main residence, that you do not go over the income limit (for a single-person household, the limit corresponds to a monthly gross salary of about €5,670 for employees, double that for multi-person homes).

You should also specify your electricity supplier, note down your voucher number and your check digit and complete the fields in the voucher. Finally, you can then send the return envelope back by post.

The voucher must be redeemed, either electronically or by mail, at least until October 31st. 

Who can redeem the voucher?

Every registered person registered in the central office (Zentralen Medleregister) with a primary residence in Austria will receive a voucher by mail, but not everyone can redeem it.

According to the federal government, people must have had their main residence at the registered address for at least one day from March 15th 2022, to June 30th of the same year. 

READ ALSO: EXPLAINED: Why are fuel prices increasing faster in Austria than elsewhere in the EU?

Additionally, the person who redeems needs to be the paying customer of an energy supplier, so if you have moved abroad and no longer have a contract, you can no longer use the voucher and not go over the income limits. 

People can only redeem one voucher, so if you moved your main residence within this period and received two vouchers, only one can be used. 

What if I haven’t received my voucher?

The government intends to send the vouchers by post until the end of May. Still, it alerts that if you haven’t received one by July 2022, you can use the website to check what happened or call 050 233 798 and request a voucher until August 31st. 

READ ALSO: Will inflation force tax changes in Austria from 2023?

What if the € 150 is higher than the amount due in the electricity bill?

In that case, according to the federal government, the excess amount will be credited by the electricity supplier for later invoices. 

Useful vocabulary

Voucher – Gutschein

Electricity supplier – Stromlieferant

Main place of residence – Hauptwohnsitz

Income Limitation – Einkunftsgrenze

Payslip – Lohnzettel

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