Lessons from Vienna: a housing success story 100 years in the making
The most famous New Year concert in the world is performed in Vienna and beamed to millions across the world under the golden ceilings of the 19th-century Musikverein concert hall. Vienna is synonymous with classical music, having been home to Haydn, Mozart, Beethoven and Schubert. It’s also a city synonymous with coffee houses, a place where in the early 20th century artists, writers, philosophers and political radicals gathered — including Klimt, Zweig, Wittgenstein, Freud, Trotsky and, of course, Hitler. Later as the frontier city of the cold war, Vienna acquired a new infamy as the City of Spies.
But there is another Vienna, a 21st-century version that most tourists don’t see. This contemporary version of Vienna is famous for its high quality of life and for consistently coming top of the Global Liveability Index.
“Vienna is a city where you can choose what century you want to live in,” says the political scientist Ivan Krastev from the IWM institute, who has made his home in the Austrian capital for more than a decade. You can time travel (on foot) from the cobbled streets of the old medieval centre through late 19th-century Art Nouveau and Viennese Modernism and then jump on to the cheap, highly efficient public transport network to visit a building by Zaha Hadid (who got her first commission in Vienna in the 1990s) before admiring a 21st-century eco-housing development — all in the space of a couple of hours.
According to the Economist Intelligence Unit, the liveability score of a city is calculated on several factors: healthcare, culture, environment, education, infrastructure and security. Vienna comes out top in nearly every category.
Along with Denmark and France, Austria has the highest top personal income tax rates in Europe, so someone earning more than €90,000 pays 50 per cent tax.
But they get a lot in return. With cities such as London and New York becoming unaffordable to anyone but the wealthy, is there much to be learnt from the Viennese model?
I moved to Vienna from London last summer and marvelled at how my annual public transport pass costs €365, one euro a day. In contrast, an annual travelcard for inner London (zones 1-3) costs more than £1,800 — about £5 per day. I was also struck by how many cultural events I could attend for free, from talks by leading writers and thinkers to open-air cinemas.
Culture is in the DNA of Vienna, but we invest a lot of money trying to make it accessible. Nobody is excluded on the grounds of wealth,” says Veronica Kaup-Hasler, the city’s minister for culture and science, who had a career in theatre before entering politics. She proudly explains how welfare recipients are entitled to apply for opera tickets. During the pandemic she inaugurated a free outdoor music festival that now takes place for six weeks every summer in city squares, council estates and old people’s homes. When I mention how many good independent cinemas there are in Vienna compared with London, she says the city subsidises those too.
But the thing that really surprised me when I moved here was how reasonable the rents are compared with London, New York and most other European capitals. The reason for this is Vienna City Council’s radical social housing policy. It is the largest property owner in Europe. Some 60 per cent of the population live in high-quality subsidised housing, including middle-class families and young professionals. Unlike London, nurses, teachers and public servants can afford to live in the centre.
Competition for rental homes in London is now at an all-time high. According to Rightmove, the average monthly rental price in London is now £2,343, a rise of 16 per cent in the past year. The average rent in Manhattan is now over $5,200 a month, up 19 per cent.
In Vienna, the wide availability of subsidised housing has moderated rents in the private sector — the average monthly price for a 60 sq m flat in the city is €767, according to the Mietspiegel rental index for 2022, with social rents significantly lower. Added to that, tenants have high levels of protection against rent rises and evictions. Having a comfortable and affordable roof over your head is critical to a sense of security and happiness — and, some economists have argued, productivity. Across London, average rent accounts for nearly 40 per cent of a renter’s gross salary.
To understand Vienna’s housing policy, you need to go back to the end of the first world war and the birth of Austria. The Habsburg empire had collapsed, and Vienna went overnight from being a wealthy imperial city to an overcrowded capital of a small country. With huge numbers of displaced people, a quarter of its population was homeless. Some built makeshift shacks in the woods, where they froze in the bitter winter cold.
“Vienna was a dying city,” explains historian Wolfgang Maderthaner. “Dying financially but also people were dying of disease including TB, which was so common they called it the Viennese disease.”
Then, exactly 100 years ago, in 1923, Vienna City Council, run by the Social Democrat party, took the innovative decision to build 25,000 units of subsidised public housing for the poor, financed by new taxes on land, rents and luxury goods.
“They taxed champagne, brothels, fine dining, horseracing, cars,” says Maderthaner, after explaining that the establishment of a new federal constitution under the First Republic made Vienna into an autonomous province. This was critical. Vienna was able to raise its own taxes and, in doing so, the capital became a socialist bastion in a conservative, Catholic country. Apart from seven years under Nazi rule, it remains so.