Housing Finance of Austrian Households

Monetary Policy & the Economy 01/2009;
Source: RePEc


This study presents a first summary of the housing finance results of the OeNB’s Household Survey on Housing Wealth in Austria. 22% of Austrian households have taken out debt to finance housing. The probability of holding such debt is significantly higher for younger and higher- income households than for others. High-income households are much more likely to have a variable rate loan or a foreign currency loan, but at the same time they also have lower loanto- value (LTV) ratios than the other groups. Regional differences – or more specifically, a west-east pattern – were identified regarding the type and amount of debt incurred: Austrian households in the western provinces tend to have higher debt and higher LTV ratios than those in the eastern provinces. Housing assistance funds and alternative forms of financing, such as inheritances or inter vivos gifts (money), play quite a significant role in housing finance. Austrian households use their property mainly for residential purposes rather than as an investment instrument: Of the households with outstanding housing loans, 74% used (at least part of) the money to purchase their primary residence, 12% used it to finance the deposit they had to make for their housing association apartment, and 17% purchased a second home. 52% of the households that took out a loan to purchase a second property use it for residential or similar purposes, while 26% of them offer it for rent and the remaining households (roughly one-quarter) use it as a store of value. These facts and the existence of a strongly subsidized rental market seem to have contributed to the rather low ownership ratio and the moderate development of Austrian real estate and rental prices by international standards. The differences identified in the structure of housing finance of Austrian households suggest that the impact of monetary policy on wealth (and hence on household consumption and investment) will also differ markedly. JEL classification: D14, D31, R21, R31, E52

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Available from: Karin Wagner, Oct 04, 2015
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    ABSTRACT: Over the past decades, household debt has increased sharply, both in absolute and relative terms, in almost all OECD countries. As the U.S. subprime crisis recently showed, even a relatively small number of indebted households can produce considerable turmoil if the sustainability of their debt is in question. The scope of aggregate data for analyzing these risks to financial stability is very limited, because it is neither possible to differentiate between households that hold debt and those that do not, nor is it possible to combine the data on household debt with data on their assets in a reasonable way. Therefore, many authorities concerned with financial stability are increasingly using microdata to analyze such types of financial stability risks. Combining different microdata sources, we assess financial stability risks arising from indebted households in Austria. We define a financial margin for indebted households and stress test each indebted household against a range of financial shocks (changes in interest rates, unemployment rate, asset prices, exchange rates and repayment vehicle yields).
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