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AK furious as rents shoot up

The Labour Chamber (AK) has criticised real estate managers over sharp price hikes.

The organisation said yesterday (Weds) that rents for flats rose by 34.5 per cent on average between 2001 and 2010 while the inflation climbed by just 21 per cent at the same time. AK officials called on property dealers to stop charging provisions and higher rents for apartments due to their excellent condition.

A spokeswoman for the Association of Real Estate Agents in Austria argued dealers were kept from issuing excessive rent increases by law. She stressed today that rents could only rise as strongly as the domestic inflation. The Austrian inflation rate shows how the average price of products and services on offer in the country developed. The Association of Real Estate Agents claimed that flat rents climbed beyond the inflation of the past 10 years due to "extensive renovation and restoration" commissioned by property owners and landlords tenants had to come up for.

The association accused the AK of "trying to cause panic" among people while the chamber underlined that Austrians’ salaries had risen by just 22 per cent since 2000. This increase fails to match flat rent hikes, AK experts pointed out. The chamber also appealed to the government coalition of Social Democrats (SPÖ) and the People’s Party (ÖVP) to abstain from issuing a general income tax hike. AK leaders warned from raising the pressure on workers and members of the middle class. The organisation spoke out in favour of higher taxation of the incomes of Austria’s richest residents.

National broadcaster ORF claimed yesterday evening that the SPÖ-ÖVP coalition agreed on such a measure. TV news reports have it that the government plans to brand the increase as a contribution of solidarity in crisis times. The measure is expected to come into effect on a temporary basis. The government plans to consider the development of the domestic and European economy, according to sources close to SPÖ and ÖVP. The coalition is expected to reveal details of its planned savings package soon. SPÖ Labour Minister Rudolf Hundstorfer told reporters on Tuesday: "Give us 10 more days and you will be informed."

The AK’s attack on the Austrian Association of Real Estate Agents comes just days after it had warned domestic electricity and gas providers from legal action over soaring consumer prices. AK President Herbert Tumpel said a team of investigators found that some of the country’s leading suppliers of energy products and services failed to pass price decreases on to clients. Tumpel explained many of the examined enterprises did not lower their prices despite benefiting from considerable trading price declines.

The AK boss said filing lawsuits against some providers of electricity and gas would be an option. He appealed to the companies to change their pricing policies. AK figures show that the price for electricity had declined by 10 per cent in global trading since January 2011. The chamber said that Eisenstadt-based electricity provider BEWAG issued a 3.3 per cent price hike at the same time. AK also criticised Salzburg AG. The company’s consumer price shot up by 3.3 per cent in the past 12 months, according to AK research. AK also attacked KELAG (plus 8.5 per cent) and Energie Klagenfurt (plus 8.7 per cent) for failing to consider a decline of global electricity trading prices.

Energy services and products and car petrol were a key force behind last year’s domestic inflation of 3.3 per cent. Statistics agency Statistik Austria said the inflation was 3.2 per cent last month. This has been the lowest increase since March 2011, according to the agency.

Meanwhile, the Viennese Institute for Economic Research (WIFO) has called for more energy sector competition. WIFO said earlier this month that an increase of competition on the domestic electricity and gas market would be beneficial for the domestic economy which grew by 3.2 per cent from 2010 to 2011. WIFO also warned that the gross domestic product (GDP) may rise by just 0.4 per cent from 2011 to 2012 before an improvement of 1.6 per cent was within reach the following year.

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