There is a very good overall housing situation in Austria in terms of household housing expenses, living space, quality of the housing stock and low regional segregation. So far, Austria has not followed the general European trends in housing policy and also still attributes an important role to the social housing sector. In this paper we give an overview of the framework within which the social housing sector operates and how it is financed. We evaluate the economic and social efficiency of the system of limited-profit housing associations in Austria and their position between state and market. The institutional and legal framework, public subsidies and new methods in capital market financing play a decisive role in their success. Through competition with the private sector, the social housing sector has a price-containing influence on the general housing market prices. We regard major aspects of the Austrian model of social housing finance applicative for CEE and SEE countries.

Countries all over Europe are in a process of reorientation of their housing policy guidelines by means of applying new instruments, reducing housing policy expenses or introducing more targeted and market-oriented subsidies for the sake of efficiency and social policy goals (Balchin, 1996; Priemus, 1997; Priemus & Boelhouwer, 1999; van der Heijden, 2002, Gibb, 2002). Until now, Austria has not joined these general policy trends but rather maintained fundamental post-war housing policy elements. Yet, Austria’s housing situation is considerably better than the EU average with the largest part of the population having access to affordable housing and public expenses for housing policy being with 1% of GDP below OECD average. Why is Austria’s housing policy so successful even though it disregards general European developments and reorientation principles? By introducing the Austrian model of social housing finance into the international discussion we hope to provide an alternative to the general policy reorientation throughout European countries and especially countries in transition. After all, there have to be certain things Austrian housing policy has done right. In the face of the highly diversified and interdependent structure of the Austrian housing policy and a complex bundle of applied instruments, this paper tries to identify specific elements in Austrian housing policy that can be shown to have a decisive beneficial influence on the overall housing situation: These are in particular the role of the Third Sector in housing policy, the methods used for its funding, as well as the implementation of market mechanisms in specific domains of housing policy.