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IMMIGRATION

Sweden struggles to find homes for refugees

New arrivals to Sweden increasingly have to stay in Migration Board (Migrationsverket) residential facilities as the country's municipalities say they cannot offer enough housing, despite financial compensation from the state.

Sweden struggles to find homes for refugees

The agency said on Tuesday that it would likely place 8,200 refugees in housing across Sweden this year, but another 2,200 people will not get access to homes.

At present 6,170 people are living in the agency’s own facilities, placing a strain on the Migration Board’s resources. The number is six times higher than what spokeswoman Carolina Henjered deems to be a manageable number of residents.

Henjered said that not being transferred to regular housing risked impeding migrants’ integration.

“They can’t get into Swedish lessons and don’t live near local labour markets,” Henjered told the TT news agency.

The job of finding housing for newly arrived refugees who have been granted asylum in Sweden rests on the shoulders of the county administrative boards, that in turn negotiate with municipalities about housing. The specific placements, however, are managed by the National Employment Agency.

“It’s a lot of actors, and at times one wonders if there are too many,” Henjered said.

The housing crunch in conjunction with the low construction rate of rental properties further complicates the situation.

“There’s a housing shortage, and too few rental properties are being built across the country – those are the reasons the municipalities often refer to,” said Södermanland county administrative board integration coordinator Anna Ekermo Tagesson.

“It’s difficult to argue against it when the housing shortage looks like it does,” she added. “The municipalities that don’t let themselves be persuaded often cite finances.”

While the state steps in to compensate the municipalities for housing refugees, many say that compensation is too low, she added.

TT/The Local/at

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PROPERTY

Why buying property in Austria remains unaffordable for most

Buying a home in Austria is a dream for many international residents, but it remains out of reach for the average earner.

Why buying property in Austria remains unaffordable for most

Many people living in Austria dream of one day owning a home, but despite recent drops in property prices and interest rates, this dream is still out of reach for many average earners. 

In Austria, it is recommended to not spend more than 40 percent of a monthly income on debt repayment.

But new analysis by tariff comparison portal durchblicker.at reveals that even a double-income household would need to spend around 60 percent of their income to afford a 90m² new-build apartment in Vienna.

While the government has created initiatives to improve the affordability, with attractive housing packages, fee reductions and eliminations of certain fees, such as the “Grundbucheintragsgebühr” (land register entry fee) and “Pfandrechtseintragungsgebühr” (mortgage registration fee) for properties up to a certain value, their impact has been limited.

Furthermore, the governments initiatives often overlook the specific needs of lower-income households and may benefit those who are already financially stable, leaving the average earner still struggling to afford a home, according to Der Standard.

READ ALSO: ‘Haushaltsversicherung’ – How does Austria’s home insurance work?

High prices, rates and strict lending criteria

One of the biggest barriers to owning a home in Austria is simply the sky-high property prices. Over the years, property prices have increased, making it more difficult for people with an average income to afford a place of their own. Even with recent minor dips in prices, they still remain high.

Another factor making owning a home challenging is the increase in interest rates in recent years. As a result, both existing variable-rate loans and newly obtained fixed-rate loans have become more expensive. Analysts expect the European Central Bank to cut interest rates by around 0.5 percent in the near future, but according to durchblicker’s calculations, this would initially only create a little relief for loan takers, where instead of around 60 percent, 55 percent of monthly household net income would be needed for debt repayment.

Another issue preventing many from realising their dream to buy a home is the difficulty in obtaining a mortgage. Since July 2022, stricter rules have applied in Austria for the granting of property loans. Loan applicants must have a deposit worth at least 20 percent of the value of their property to be granted a loan, according to the financial online platform Finanz.at. This means that even applicants with higher incomes may struggle to get their dream financed. 

Furthermore, many loan takers with variable-rate loans, especially those recently obtained, are facing significant challenges. The variable interest rates have increased significantly since the initiation of these loans, resulting in higher monthly repayments, reported Der Standard.

Few people can afford their own home in Austria, especially in Vienna. Photo by Christian Lendl on Unsplash

Experts suggests fixed rate loans and cooperative housing models

Andreas Ederer, Head of Banking at durchblicker.at, recommends loan takers with variable-rate loans to change to fixed-rate loans. He suggests that fixed-rate loans have become more attractive as they are currently cheaper than variable-rate loans, reported Kurier

Unlike fixed-rate loans, which have a steady interest rate throughout the loan term, variable-rate loans can change over time in response to shifts in market conditions or the economy.

Experts also suggest alternative models for increasing affordability. One idea is to create more opportunities for cooperative ownership with mandatory purchase options. This could offer a more affordable option where costs such as maintenance and taxes are shared. According to Der Standard, cooperatives also often have access to loans with better terms.

READ NEXT: How can I move into affordable cooperative housing in Vienna?

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