Vienna and the housing reality
Ah, Vienna. According to The Economist, the small central European city – it has an urban population of around 2 million – is, for the second straight year, the world’s most liveable city.
Understandably, that warrants investigation: what is Vienna doing so well, and can we replicate it elsewhere? Enter the NYT, which last month described Vienna as a “renters' utopia”:
“Experts refer to Vienna’s Gemeindebauten as ‘social housing,’ a phrase that captures how the city’s public housing and other limited-profit housing are a widely shared social benefit: The Gemeindebauten welcome the middle class, not just the poor. In Vienna, a whopping 80 percent of residents qualify for public housing, and once you have a contract, it never expires, even if you get richer. Housing experts believe that this approach leads to greater economic diversity within public housing — and better outcomes for the people living in it.
Vienna’s generous supply of social housing helps keep costs down for everyone: In 2021, Viennese living in private housing spent 26 percent of their post-tax income on rent and energy costs, on average, which is only slightly more than the figure for social-housing residents overall (22 percent). Meanwhile, 49 percent of American renters — 21.6 million people — are cost-burdened, paying landlords more than 30 percent of their pretax income, and the percentage can be even higher in expensive cities. In New York City, the median renter household spends a staggering 36 percent of its pretax income on rent.”
Closer to home, the Greens' housing spokesperson Max Chandler-Mather – whose party recently blocked Labor’s $10 billion Housing Australia Future Fund – tweeted an endorsement of Vienna’s housing model, reaching the following conclusion:
“The property industry and their allies will tell you the only way to tackle the housing crisis is to give property developers more power to do whatever they want. But that’s what got us in this mess in the first place. Vienna proves the reality is the exact opposite.”
A key word missing from Chandler-Mather’s takeaway is “Australia”. Countries have different cultures, norms and institutions developed over hundreds of years, and they tend to be quite rigid, making it incredibly difficult to ‘transplant’ what works in one place somewhere else. And Vienna’s housing model is far from perfect – for example, it favours the established middle class over “the really poor and needy”, and is less “newcomer-friendly” than Australia’s housing regime.
It’s also not clear how property developers “got us in this mess”. The evidence points overwhelmingly to local zoning laws and the people who, largely through sheer luck of being born before subsequent generations, work hard to prevent precisely the type of structures that Chandler-Mather wants from being built in Australia – medium and high density residential units. Even ‘greedy developers’ struggle to improve Australia’s density compared to cities like Vienna, which houses 4,326 people per km2, or about 10 times as many as Sydney (433 people per km2).
There’s a reason even public housing is difficult to build in Australia, and it’s also not because of greedy property developers: just this week a Labor-led Sydney council, in Labor-led NSW, “voted to delay a public housing renewal project that has waited more than five years for approval”.
If you can’t build public housing in councils aligned with your own political party, what chance is there for the rest of Australia, which is a much larger and more diverse country than the city of Vienna?
I’m all for exploring options to improve the housing situation in Australia, including through public or non-profit entities. But it’s not as simple as pointing to a small, relatively homogeneous European city and claiming that it has some kind of secret sauce that would fix Australia’s housing woes. Even if Australia’s politicians unanimously decided to go down that road, there are a lot of issues to work out first, including (but by no means limited to): where the public housing should be built; which authorities have the capacity and resources to develop, own and manage a large quantity of it; and how much will it all cost (and who will pay)?
Presumably Chandler-Mather will soon disclose how the Greens would go about achieving the reality he claims he wants to see, including how it would work in an Australian context. That is, of course, assuming he has given those issues any thought at all, and wasn’t just attempting to convince a few gullible followers that just because a model has worked in Vienna for a hundred years that it’s also the silver bullet for Australia’s housing affordability crisis.
Australia’s housing market might not work perfectly. But just because the Vienna model sounds good to some, that doesn’t mean it will work well down under.