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Austrian models of housing finance and subsidy
Astrid KratschmannErste Bank AG - s Bausparkasse
Bukarest, 11th October 2006
EB grows home market to 120 million people
Clients: 0.3m; ~#9Retail deposits: 2%Branches: 66
Clients: 2.5m; #1Retail deposits: 32%Branches: 300
Clients: 0.9m; #2Retail deposits: 6%Branches: 171
Clients: 2.8m; #1Retail deposits: 34%Branches: 381
Clients: 5.3m; #1Retail deposits: 33%Branches: 637
Clients: 0.6m; # 2Retail deposits (inc. SBs): 21%Branches: - „Own“ :142 - Subsidiaries: 134
Clients: 0.6m; #3Retail deposits: 11%Branches: 124
Clients: 2.2mBranches: 711
Bank Prestige Founded in Dec 2005
The Ukraine further strengthens EB’s long-term growth prospects
4 core strategies
1. Focus on core business potential
2. Building a strong joint brand with the Austrian savings banks
3. Targeting a home market of 120 million people in Central Europe
4. Transferring the multi-channel distribution model throughout Central Europe
Astrid KratschmannHead “Housing CEE affairs”
integration of Erste Bank business policy „housing & real estate finance“ in the CE subsidiaries and Austrian savings banks
know how transfer within Erste Bank Group attendance of Austrian customers in
expanding their business to CE partner for CE subsidiaries and Austrian
savings banks in all questions of „housing finance“, especially large scale mortgages
regular meetings of “housing” colleagues – HOUSING FORUM
ongoing mutual support (translations, land- and company register, subsidy systems, aso)
cooperation in the field of cross boarder housing projects
Cooperation EBV & CE subsidiariesin the field of multi storey housing
Agenda
TOP 2
TOP 3
TOP 4
role of communities
TOP 1
housing policy in Austria
living in selected CEE countries
TOP 5 excursion I: the Austrian “Wohnbauanleihe”
housing aspects
TOP 6 excursion II: building societies’ housing loans
TOP 7
TOP 8
excursion III: real estate securities
contact
political aspects of housing
living = basic need basis for social peace crucial for trust in social policy
initiatives economic importance of building and
real estate economy (7 % of GDP in Austria, 6 % in Romania)
reasons for state involvement Property is not optionally augmentable high and long term amounts to be invested
sustainable affordability regional aspects (private investors would not invest in
unattractive regions) interference with transport policy (people switch to
owner occupied homes) environmental policy (40 % of energy for heating) employment effects (1 bn € building volume initiates
21.000 jobs) 8,2 % of EU labour force are directly occupied in the
building industry, high employment density of housing
fundraising for housing
private capital/personal contribution (home owners)
5-10 % on rented flats 10 – 15 % on condominiums Up to 50 % on homes
free capital market about 50 – 80 % of total costs
public funds/public authorities About 20 % of total costs – at the beginning of 20th century
up to 100 %
Agenda
TOP 2
TOP 3
TOP 4
role of communities
TOP 1
living in selected CEE countries
TOP 5 excursion I: the Austrian “Wohnbauanleihe”
housing aspects
TOP 6 excursion II. building societies’ housing loans
TOP 7
TOP 8
excursion III: real estate securities
contact
housing policy in Austria
potential objectives of housing policy
adequate supply with dwellingsnew construction, in regions, refurbishment, price categories,…
raise of quality refurbishment, ecological measures, energy saving, accessible
for disabled persons economic and employment policy regional policy aspects environmental policy property and distributional policy
subsidy system I
object subsidy long term public loans interest subsidies / annuity subsidies/
contribution to construction costs (limitation of cost components)
liabilities/guarantees subject subsidy
equity surrogate loans rent support
subsidy system IIindirect subsidies
liabilities/guarantees
tax concessions
housing development by state
institutionalisation of housing development (non profit
housing providers)
right-to-buy for tenants
capital allocation measures
land procurement and -zoning
housing institutions
subsidy processing by Federal States housing developers, investors
– limited profit housing companies(3rd sector)
– commercial housing developers
– institutional investors (insurance companies, pension funds, real estate investment funds)
banks, savings and loan associations, mortgage (housing) banks
legal framework I
rent regulations (tenancy law, non profit housing developer law, subsidy and fundraising regulation,…)
residence property law
clear regulation of maintenance
subsidy laws
legal framework II
land register building regulations housing developer contracts – acts
- securing of advance payments- securing of payments during construction period- payment securing by notaries and lawyers
regulation of real estate transactions, soil realization
success components of the Austrian housing finance system fund raisers and housing institutions form a
risk community and are interdependent
they have always known this and thus been acting in a correspondent and mutual way
housing policy = economic policy, only indirectly social policy
the subsidy system has been developed to the respective framework of all housing institutions
housing policy has always been prepared to adapt legal framework to the partner´s economic prerequisites and possibilities
crucial points of a housing concept
different instruments in parallel definition of clear priorities attention to execution of subsidy
instruments creating a short-, mid- and long-term
concept (seeking for a broad political consensus)
Agenda
TOP 2
TOP 3
TOP 4
TOP 1
housing policy in Austria
living in selected CEE countries
TOP 5 excursion I: the Austrian “Wohnbauanleihe”
housing aspects
TOP 6 excursion II: building societies’ housing loans
TOP 7
TOP 8
excursion III: real estate securities
contact
role of communities
role of municipalities/communities– example city of Vienna
fundraising („Wohnbausteuer“, housing tax 1923)
municipal housing (development and maintenance)
direct investment in (ltd. profit) housing developers
land procurement (prevention of real estate speculation) Wohnfonds Wien
concepts of urban development
Agenda
TOP 2
TOP 3
TOP 4
role of communities
TOP 1
housing policy in Austria
TOP 5 excursion I: the Austrian “Wohnbauanleihe”
housing aspects
TOP 6 excursion II: building societies’ housing loans
TOP 7
TOP 8
excursion III: real estate securities
contact
living in selected CEE countries
forms of housing
HU CZ SK SI HR A RO CS
Ownership / rent 92 / 8 49 / 51 77 / 23 65 / 35 85 / 15 54 / 46 97 / 3 78 / 22
Ownership of rental flats
• non-profit/ cooperative/ municipal
• 56 % • 80 % • 100 % • 76 % • 71 % •29,5 % • 57,9 % • 51,2 %
• commercial • 34 % • 20 % • 13 % • 23 % • 61,5 % • 42,1 % • 48,8 %
• others • 10 % • 11 % • 6 % • 9 %
Number of panel block buildings
38 % 31 % 42 % 37 % n.a. n.a. about 30 %
dwelling stock/population (status: between 2001 and 2004)
HU CZ SK SI HR RO CSAT
Current 1971 1981
Number of population (in thsd.)
10.089 10.221 5.385 1.998 4.444 21.659 7.498 8.207 7.491 7.555
Dwellings per thousand inhabitants
413 427 350 396 423 374 399 476 356 404
Number pers./dwell.
2,4 2,3 2,9 2,5 2,4 2,7 2,5 2,1 3,0 2,8
Ø m² living floor area
78 53,7 56,1 74,6 70,4 38 62 91,3 70,8 86,2
Ø m² living floor area/person
32,5 23,3 19,3 29,8 29,3 14,3 24,8 29,3 23,6 30,8
necessary construction to achieve EU-15 level
HU CZ SK SI HR RO CSEU-15
Number of dwellings per thousand inhabitants
413 427 350 396 423 374 399 450
Additional number of flats to achieve EU-15 level
373.626 235.083 538.500 107.892 119.9881,646.084
382.398
New dwellings construction
41.084
(05)
32.863
(05)
14.863
(05)
7.516
(05)
19.995
(05)
30.127
(04)
16.351
(04)
Achievement of EU- Ø if new construction remains constant
9,1 years
7,2 years
36,2 years
14,4 years
6,0 years
54,6 years
23,4 years
In relation to new construction - achieve EU-level in 10 years
- - 362 % 144 % - 546 % 234 %
ratio construction costs and incomeHU CZ SK SI HR AT RO CS
Ø construction cost per m² living floor area in EUR
500,-- 625,-- 500,-- 800,-- 650,-- 1.400,-- 1.000,- 950,--
Ø construction cost per dwelling in EUR
35.000,-
(70 m²)
43.750,-
(70 m²)
35.000,-
(70 m²)
56.000,-
(70 m²)
45.500,-
(70 m²)
126.000,-
(90 m²)
70.000
(70 m²)
66.500,-
(70 m²)
Ø monthly gross wage, in EUR
600,-- 673,-- 482,-- 1.212,-- 824,-- 2.302,-- 276,-- 212,--
Construction cost : annual income
4,9 5,4 6,1 3,9 4,6 4,6 21,1 26,1
ratio purchase price and GDPHU CZ SK SI HR AT RO CS
GDP per capita in EUR
8.697 9.888 6.927 13.700 6.752 30.031 3.662 2.434
Ø purchase price, new construction in capital city (EUR)
80.500
(70 m²)
120.680
(70 m²)
112.000
(70 m²)
119.000
(70 m²)
119.000
(70 m²)
324.000
(90 m²)
140.000
(70 m²
84.000
(70 m²)
Ø purchase price : GDP per capita
9,26 12,2 16,17 8,69 17,62 10,79 38,23 34,51
finished dwellings since 1990Number of finished dwellings
comparison Austria - selected CEE-countries
0
10
20
30
40
50
60
70
1990 1992 1994 1996 1998 2000 2002 2004year
nu
mb
er
of d
we
llin
gs
in th
ou
san
d
AT (data 2003 estimated by WIFO) CZ SK HU SI HR RO CS
Agenda
TOP 2
TOP 3
TOP 4
role of communities
TOP 1
housing policy in Austria
living in selected CEE countries
TOP 5
housing aspects
TOP 6 excursion II: building societies’ housing loans
TOP 7
TOP 8
excursion III: real estate securities
contact
excursion I: the Austrian “Wohnbauanleihe”
background – starting position 1990
high demand for dwellings
high and unsteady interest rate level
short of long term capital
unsufficient federal budget situation
capital market direction measures
term transformation
capital allocation for housing measures
capital allocation in the inland
incentives for private investors interesting yield return
tax concessions safety of investment
by earmarking of funds for housing purposes providing surety by means of mortgages consumer protection measures for issuing securities right of issuing only for special banks and housing developers with state licence
qualification as measure of provision
surety by mortgages product with current revenues from real estates
tax concessions
capital gains tax exemption (25 %) up to 4 % interest rate 4 % accord to 5,33 % alternative investment
purchase of mortgage bonds is deductible as special expense in assessing income tax
terms
minimum 10 years maturity
mortgage bonds must be used for refinancing
* high volume housing construction* high volume housing refurbishment
both according to respective housing subsidy systems and conditions (e.g. max 150 m², rent restrictions, etc.)
market Iannual issues "Wohnbaubanken"
-
200,00
400,00
600,00
800,00
1.000,00
1.200,00
1.400,00
1.600,00
1.800,00
2.000,00
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
year
in m
n EU
R
market II
issues "Wohnbauanleihen from 1994-2005
37%
9%23%
5%
11%
15%
BACA
Bawag
Hypo
Immo-Bank
Raiff eisen
s Wohnbaubank
market III
total issues "Wohnbaubanken"
-
200,00
400,00
600,00
800,00
1.000,00
1.200,00
1.400,00
1.600,00
1.800,00
2.000,00
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
year
in M
io. E
UR
level of interest rateinterest rate for mortgage- and building society loans
2
3
4
5
6
7
8
9
10
11
12
1319
74
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
inte
rest
ra
te (
%)
mortgage loans (1996-06/2003 source ÖNB, estimated till 1995)
savings loans
provision of housing space (1996-06/2003 source ÖNB, estimated till 1995)
May 2005
the impacts
stabilisation of interest rates
facilitation of term transfer; structuring of capital
thus minimisation of capital and interest rate risks
financing of approx. 12.000 flats per anno
price reduction 4,7 to 3,4 € per m²/p.a.,40/30 cent monthly (1/0,75 % interest rate, 20 years)
conclusion successful in raising long term private capital for housing
purposes
reduction and stabilisation of interest rates
measure of local creating value
study:Karl Czasny/Peter Moser, Einsatz und Gesamtwirkung der Wohnbauförderungsmittel (application and total impact of housing subsidies), Vienna: Lang Verlag 2000
„....in its functioning machinery principally successful and important supplementation of existent subsidy modules...“
„...distribution effects viewing social, sectoral and regional aspects are complementary to the effects of bausparen...“
Agenda
TOP 2
TOP 3
TOP 4
role of communities
TOP 1
housing policy in Austria
living in selected CEE countries
TOP 5 excursion I: the Austrian “Wohnbauanleihe”
housing aspects
TOP 6
TOP 7
TOP 8
excursion III: real estate securities
contact
excursion II: building societies’ housing loans
share of Bauspar-loans and FX-loans in private housing loans
Anteile Bausparfinanzierungen und FW-Kredite an gesamten Wohnkrediten28.6
42.5
72
31.3
55.0
53
33.3
05.6
84
35.1
93.8
37
37.5
17.9
72
40.7
19.6
11
45.9
10.3
46
52.5
93.2
10
55.1
70.8
65
60.0
47.3
22
62.5
63.3
32
63.4
49.2
03
64.5
24.7
61
65.8
47.2
09
67.3
64.6
59
67.4
31.3
94
0,19% 0,53% 1,19%2,94%
6,06%7,57%
13,95%
42,06%
38,82%37,41%
34,47%
30,55%
32,59%30,68%
20,57%
30,12%29,88%28,73%27,84%
24,29%
21,30%
28,34%29,68% 29,98%
20,62%
21,02%
21,11%
21,16%
21,59%
24,14%22,10%
26,20%
0
10.000.000
20.000.000
30.000.000
40.000.000
50.000.000
60.000.000
70.000.000
80.000.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 Jun2004
Dez2004
Mär2005
Jun2005
Sep2005
Dez2005
Jän2006
in E
UR
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
0,4
0,45
Wohnkredite gesamt Wohnbaukredite in FW Wohnbaukredite in EUR
Bausparkasse gesamt Anteil FW-Kredite Anteil Bausparfinanzierungen
Agenda
TOP 2
TOP 3
TOP 4
role of communities
TOP 1
housing policy in Austria
living in selected CEE countries
TOP 5 excursion I: the Austrian “Wohnbauanleihe”
housing aspects
TOP 6 excursion II: building societies’ housing loans
TOP 7
TOP 8 contact
excursion III: real estate securities
Exkurs II: I-ATX zu ATXPerformance IATX und ATX im Vergleich seit Jänner 1996 (BASIS 100)
80,00
130,00
180,00
230,00
280,00
330,00
380,00
430,00
480,00
02
.01
.19
96
02
.05
.19
96
02
.09
.19
96
02
.01
.19
97
02
.05
.19
97
02
.09
.19
97
02
.01
.19
98
02
.05
.19
98
02
.09
.19
98
02
.01
.19
99
02
.05
.19
99
02
.09
.19
99
02
.01
.20
00
02
.05
.20
00
02
.09
.20
00
02
.01
.20
01
02
.05
.20
01
02
.09
.20
01
02
.01
.20
02
02
.05
.20
02
02
.09
.20
02
02
.01
.20
03
02
.05
.20
03
02
.09
.20
03
02
.01
.20
04
02
.05
.20
04
02
.09
.20
04
02
.01
.20
05
02
.05
.20
05
02
.09
.20
05
02
.01
.20
06
IATX
ATX
Exkurs III: market capitalisation of the 8 Austrian real estate stock companies
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
H1
1996
H2
1996
H1
1997
H2
1997
H1
1998
H2
1998
H1
1999
H2
1999
H1
2000
H2
2000
H1
2001
H2
2001
H1
2002
H2
2002
H1
2003
H2
2003
H1
2004
H2
2004
H1
2005
H2
2005
H1
2006
Agenda
TOP 2
TOP 3
TOP 4
role of communities
TOP 1
housing policy in Austria
living in selected CEE countries
TOP 5 excursion I: the Austrian “Wohnbauanleihe”
housing aspects
TOP 6 excursion II: building societies’ housing loans
TOP 7
TOP 8
excursion III: real estate securities
contact
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