How Much State and How Much Market? Comparing Social Housing in Berlin and Vienna
By Susanne Marquardt and Daniel Glaser. Published in German Politics on 5 June 2020
This article examines the effect of two different social housing systems on housing-market characteristics and affordability using a case study of Berlin and Vienna.
Germany and Austria share similarities in their housing market characteristics such as well-developed rental markets, low homeownership rates and conservative lending standards which are considered to be reasons for the lasting housing market stability in recent decades
Both cities challenged by growing populations and rising house prices, but the study shows that Vienna is more successful in providing affordable housing as it has created effective institutions to attract and retain private actors in this sector.
The report argues that different housing market outcomes can be attributed to fundamental differences in the organisation of social housing provision reflecting divergent state-market relations. In Berlin, social housing has been seen as a provisional measure to correct temporary market imbalances. The city embodies Germany’s tradition of more limited state intervention in the housing market. In Vienna, continuous state participation in the housing market has created a framework of balanced rights and responsibilities for social and private actors to achieve social policy goals.
In Germany, the funding can be described as a form of public-private partnership. Public subsidies cover the gap between the reduced rent – which is charged to eligible tenants – and the cost-based rent – which is determined by production cost and funding modalities. Typically, the amortisation period is reached after 20–40 years, after which the subsidised rent has reached the market level, and the dwelling is transferred to the private segment of the market. A direct consequence of the time-limited social obligation is the built-in loss of social housing at the end of the amortisation period. As the German state gradually withdrew from social housing from the 1980s onwards, the stock began to decline.
Vienna’s social housing is generally open to public and private housebuilders and consists of three elements: public housing, provided by the municipality; housing provided by limited-profit housing associations (LPHAs); and different private providers receiving public subsidies.
The article also provides an overview of different policies and in both countries.
Keywords: Vienna, Berlin, Austria, Germany, affordability, social housing, public housing, public subsidies, rent, profit housing associations