End of the KIM Ordinance: Real estate market in terms of option!

End of the KIM Ordinance: Real estate market in terms of option!

The KIM Ordinance, which was introduced in August 2022, is about June 30, 2025. This regulation was created to regulate construction finance and should protect young families and investors from excessive debts. However, the strict guidelines led to a dramatic decline in demand for housing loans- in 2023 it fell by about 70 percent compared to previous years, as Reinhard Karl, chairman of the banking and insurance industry in Lower Austria, stated. The burdens that this ordinance brought with it for real estate buyers have severely affected the construction industry, and Wolfgang Ecker, President of the WKNÖ, described the upcoming expiry as "long overdue".

The financial market stability committee (FMSG) has announced that the positive development in the case of credit cases is no longer a system risk to the financial market. This assessment supports the decision to let the KIM-VO expire, which is perceived by many in the economy as an "extremely gratifying sign", as Karlheinz Kopf emphasized by the Austria Chamber of Commerce. Bank and insurance chairman Michael Höllerer described the new opportunities for residential finance as an important impulse for the acquisition of home ownership in Austria from 2025. The strict guidelines of the KIM-VO have made critical voices loud that drawn attention to the dramatically increasing real estate prices that make the dream of home unreachable for many.

new regulations and their effects

With the expiry of the KIM regulation, the banks are expected to build on the established lending standards in order to continue to control risks in the real estate sector. The proportion of own funds must be at least 20 percent in accordance with the requirements of the KIM-VO and the repayment rate may not exceed 40 percent of the net income. Nevertheless, Green MP Nina Tomaselli warns of the consequences of this decision: she described the expiry of the regulation as "totally unreasonable" and noted that the corresponding risks to the financial center would increase. While the government is celebrating the upcoming end of the strict regulations as a relief, it remains to be seen how the situation on the real estate market will develop, where there are still essential risks.

The expiry of the KIM regulation is thus seen as a far-reaching step into the future, which harbors both risks and new opportunities for building finance in Austria. Further information about which measures are being taken to the stability of the market will be expected in the coming months by the Austrian National Bank (OENB) and the financial market inspection (FMA), so orf.at reported about the necessary tests of the lending standards.

In addition, the APA-OTS could bring.