On 85 hectares of disused freight yards attached to a demolished railway station in Vienna rises one of the largest urban redevelopment projects in Central Europe. The new neighbourhood hosts offices, restaurants, green spaces, a convention centre, and a public car park entirely powered by its own solar panels, as well as thousands of new apartments built around a 10-hectare park that has been left free as “urban wilderness” in the middle of the area. In many cities, apartments in such a high-profile new development would be out of reach for people on average salaries. But a large percentage of the new residences in the regenerated Nordbahnhof district are affordable for regular Viennese.
“I really appreciate living in a beautiful and central neighbourhood, with lots of peace and charm,” says Nathalie Stevanovic, a local resident. “It’s so lively, it leaves little to be desired. The combination of the great location with numerous bars and restaurants and affordable rent makes it particularly attractive for the younger generation.”
Stevanovic lives in an apartment owned by ÖVW (Österreichisches Volkswohnungswerk), a subsidiary of Austria’s Erste Bank and one of the city’s largest landlords, in a development part-financed by the European Investment Bank. And she isn’t alone in appreciating the housing situation in the country’s capital.
Affordable by design
Vienna frequently ranks as one of the most liveable cities in the world. In fact, this year, the city topped The Economist Intelligence Unit’s Liveability Index, an annual ranking of 173 cities worldwide, for the third year in a row. Many factors contribute to the city’s excellent performance. Vienna received perfect scores for stability, healthcare, education and infrastructure, after all. But the availability of quality housing sets it apart from other top ten cities, such as Melbourne, Sydney and Vancouver, which have fallen down the ranking because of their property markets.
The availability of affordable housing in Vienna and other Austrian cities is no accident. It’s the result of a carefully designed system, in place for over 100 years, which continues to enjoy strong support from national and regional authorities.
One key feature of the system is that nearly half the population rents rather than owns their own home. In Vienna the proportion of renters is as high as 75%. Austria’s homeownership rate is much lower than the 80% average in other EU countries, though it's similar to Germany and Switzerland. The high prevalence of renting, however, is not a sign of market failure, but a deliberate policy aimed at prioritising access to quality housing.
A central part of the Austrian approach is the idea of Limited-Profit Housing Associations. These are property owners mandated to serve the common good by providing rental accommodation at rates typically 25% below market value. 182 of these independent entities own as much as 40% of Austria’s rental homes. The system ensures that middle-income earners, often squeezed out of the private market, have access to stable, long-term housing.
Residents of the Nordbahnhof quarter like Mirel Dakic see another advantage. “It’s reassuring to know that we live in a flat run by a limited profit-housing developer that looks after everyone’s needs,” says Dakic.
- Read about the European Investment Bank’s support for affordable housing in Sweden and Ireland.
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An Austrian recipe
Two other factors contribute to Austria’s housing success: access to affordable land and a stable financing structure. Vienna’s urban planning policies cleverly link land availability to affordable housing commitments. Developers gain access to prime land, often from repurposed public spaces like former railway yards, in exchange for dedicating a significant portion (50-75%) of their projects to affordable housing. This ensures a steady supply of affordable units within new developments.
Long-term, fixed-interest loans, such as those provided by the European Investment Bank at advantageous rates, provide the financial stability needed to maintain consistently low rents. This predictability shields tenants from the volatility of the private market, allowing them to plan for the future without fear of escalating housing costs.
“Our corporate goal is to provide affordable housing,” says Andreas Reittinger, managing director of ÖVW. “In economically challenging times, predictable long-term financing is especially important so that we can guarantee reliable rents even when interest rates rise.”
Affordable and sustainable
The European Investment Bank’s relationship with Erste Bank stretches back 30 years. The two institutions have signed over half a billion euros in loans over the last five years for affordable housing projects, and a €100 million loan to build new energy efficient homes and renovate existing ones. As a result, more than 6 800 new affordable homes have been built in Austria with EIB support in recent years.
In 2024, the European Investment Bank agreed to lend €175 million for the construction of affordable and energy efficient rental flats in Salzburg and Innsbruck. The loans to Salzburger Sparkasse and Tiroler Sparkasse, both part of the Erste Bank Group, are at favourable interest rates to boost sluggish investment in the housing sector.
“The financing of green properties in particular plays a central role for us,” says Patrick Götz, board member at Tiroler Sparkasse. “Together with Erste Group, we have joined the Net-Zero Banking Alliance and committed ourselves to achieving net zero emissions by 2050. Climate change is probably the most important challenge in ensuring a future worth living in our region.”
“We believe that building wealth begins with affordable housing, and it is in our mission to provide access to financial wealth for everyone”, adds Christoph Paulweber, CEO of Salzburger Sparkasse. “By providing long-term housing loans with fixed interest rates, we are incentivising housing developers to start new housing projects. People living in these future homes, in turn, also profit from affordable renting prices”.
