Housing affordability problems are expected to increase for Austrian households because housing costs have been rising dynamically
over the last years. Households who moved more recently are expected to be affected the most. Previous research has identified
younger households as also being prone to housing affordability problems because they have relatively lower incomes. There
is a strong correlation between the year of move-in and age – young households comprise a large share of households who moved
recently. This paper applies the tailored ratio and residual income approach to Austrian households for 2014 to analyse housing
affordability by age group and also by year of move-in. To identify whether age (lifecycle) or prevailing market conditions
cause affordability problems, affordability measures are compared for age groups at different intervals of move-in. The results
suggest that both effects are at work: young households who moved recently have the highest incidence of affordability problems
compared to older households. For other age groups, affordability problems also mostly occur for households who moved recently.
The price distortion between below-market rents due to long-term contracts and market rents becomes more pronounced. This
adversely affects newcomers and dis-incentivises mobility of incumbents.
Forschungsbereich:Strukturwandel und Regionalentwicklung