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Beer in Germany set to go up in price

There's bad news for lovers of Germany's national drink. Three leading breweries have announced that the price of beer will increase next year.

A server with two big beers at a festival in Straubing, Bavaria, in August.
A server with two big beers at a festival in Straubing, Bavaria, in August. Photo: picture alliance/dpa | Armin Weigel

The Radeberger Group, Krombacher and Veltins breweries say they plan to hike up their prices in both the hospitality and retail trade sectors next spring, DPA reported on Tuesday.

According to estimates by the industry service GetränkeNews, the price increases are likely to make a glass of Pils, Export or Weizen in the Kneipe (pub) or bar between 30 and 50 cents more expensive. The price of a crate of beer will probably rise by a euro.

Germany’s largest brewery group Radeberger justified the move by pointing to the rising cost of utilities and supplies.

“In addition to massive losses in turnover and earnings during the 18 months of the pandemic, all companies are now facing further quite massive cost increases for energy, logistics, empties as well as raw materials and supplies,” a company spokeswoman said.

READ ALSO: Can Germany’s small breweries survive the coronavirus crisis?

A Veltins spokesperson pointed out that costs in the energy sector alone had risen by over 150 per cent in the past three years.

“This can no longer be absorbed,” he said. The planned price increase therefore applies to the catering industry as well as to the retail trade.

Krombacher pointed out that the last major price adjustment was three years ago.

Industry experts say they believe other breweries will follow the example of Radeberger and Co. “Beer will become more expensive across the board in spring 2022,” experts predicted.

In the eyes of the brewery firms, there are good reasons for price increases.

Since the beginning of the Covid pandemic, there has been a significant drop in prices on the market. That’s because retailers tried to encourage customers to buy more beer during the tough shutdown months.

READ ALSO: From ‘crisis beer’ to crowdfunding: How German small brewers are getting creative during the pandemic

Furthermore, people in Germany drank less beer during the crisis than at any time since reunification. In the first half of the current year, domestic sales fell by almost five percent to a low of 3.3 billion litres, the Federal Statistical Office reported in the summer.

The brewing industry lacked business above all in the catering trade and at the many large events that had to be shelved. The only bright spot was the sale of bottled beer in the retail trade – but that meant only a few large breweries profited.

However, beer lovers still have a grace period before the new prices come in: Radeberger does not want to start raising prices until February. Retail prices may even not rise until May. Krombacher and Veltins want to up their prices at the beginning of April.

And there is still the hope that some breweries, in view of the fierce competition, will not go along with the wave of price hikes in the end.

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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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