I interviewed Christian Schantl of Wiener Wohnen as part of VŠE/MBARE’s ongoing podcast series. The episode just dropped on YouTubeand I’ve already gotten blowback from it. The mission of Schantl’s company, which is owned by the City of Vienna, is to provide the broadest possible range of residents with affordable housing. Wiener Wohnen is essentially a private company, but it’s owned by Vienna. That’s the reason it acts in favor of its residents.
Here in the former East Bloc, two generations of total state control has made most people allergic to the idea of public sector meddling in ‘private sector’ matters. Anything that might hurt a company’s ability to turn a profit is quickly branded as leftist Communism. For a good example, look no further than Berlin and the ferocious response to its struggle to respond to rapidly rising rents.
But Berlin’s a different case study than Vienna. Through Wiener Wohnen, the Austrian capital invests €400 million annually to create around 7,000 apartments, which are then leased at affordable rents (currently €6.67 per sqm). The funds are raised through a federal tax of 1% on personal income.
Is that Communism? When I hear such claims, I’m reminded of how many in my native United States view Europe’s healthcare system as a backward leftist fantasy. Simply because everyone can afford and has access to it.
Keep that thought in mind when reading the last two questions of my interview with Christian Schantl.
Me: Vienna’s investments in affordable housing suppresses rent levels, but do you think this discourages new development?
Christian Schantl: 50% of the Viennese housing market is in private hands. It’s an interesting market for long-term investments; it’s not an interesting market for speculation. That’s the difference. We’re happy with that because we’re not interested in helping those who already have a lot of money to get even more while making the situation in housing more difficult for the broad spread of the population. We want to work for society. Not for speculators.
So, you don’t think that turning a basic human need like housing into an investment product is the best way forward?
Schantl: This mindset — that housing is just for making money — is not in the interest of the population. I do not understand any government that thinks a speculator is more important than their own society.
When I first published this interview a few days ago, I got some strong reactions from some friends and readers. And it was one of those emails that really got me thinking about what’s going on here:
Him: what the f**k does the Austrian guy means by “speculation”?!? Having three flats?
Me: Yes. He means that when enough people treat flats as an investment vehicle, it leads to housing becoming unaffordable for the majority of people.
Him: We have experienced for 40 years here what it means when the flats are not “investment vehicles”, all belonging to the state fulfilling all just and fair social needs, affordable for anyone and none. Not exactly cheerful period of this country … The problem is not ownership. The problem is that it takes ages to build anything in this country, and especially in Prague.
There’s no question that the Czech Republic’s archaic planning process and the NIMBY mindset it enables is causing catastrophic damage. Excessive housing prices isn’t just an inconvenience. It’s having a serious impact on the demographics of major cities and laying the groundwork for potentially dangerous social unrest. It’s a larger topic, but I’m convinced that runaway housing prices worldwide is a spectre that lurks behind much of today’s growing political divisions.
There’s obviously nothing wrong with owning three flats. It’s not just legal, but it’s natural to look for ways to secure your own financial future. But right or wrong, if enough wealthy people do this in a city that suffers from chronic undersupply, the resulting rise in prices and rents will eventually drive out many of the people that make cities function. That’s not good for anyone, and it’s no way to maintain the value of your real estate. This is the heart of the affordability dilemma.
Also in ThePrime
Tomáš Kadeřábek (Assoc. of Developers): We need to look to the future
