“In the most highly valued regions around Zurich, in central Switzerland and in the Lake Geneva region, the situation remains tight,” Wüest & Partner said of the apartment rental market in a report released on Thursday.
Low vacancy rates — as little as 0.1 percent in Zurich and Lausanne — and continued high demand for housing mean little sign of relief on the horizon for lower costs.
Rents for new apartments in the country’s two biggest cities kept rising in the second quarter of the year, the consultant said in its autumn monitoring report.
The median cost of a 100-square-metre apartment in Zurich rose to 2,500 francs ($2,700) a month, while rents for high-end suites of the same size were stable at 5,585 francs.
The cost of renting was even higher in Geneva, where average new apartments of 100 square metres fetched 3,000 francs a month and luxury equivalents commanded 5,850 francs.
An increase in housing supply is expected to boost vacancy rates and put downward pressure on prices for condos and villas.
The consultant noted the construction industry invested 15 billion francs in multi-family housing last year and a further increase is expected this year.
Around 57,000 new apartments were completed in the summer, close to a record.
Immigration is continuing to keep demand for rental housing high and the fact that half of the new apartments built were marketed for sale rather than renting kept a lid on supply, the report indicated.
However, if the flow of foreigners to the country slows down significantly, Wüest & Partner warned rents for new apartments in the top categories will be the first to drop, particularly outside the big centres such as Zurich and Geneva.
But the consultant expects the price of villas to rise 2.8 percent over the next 12 months, while it predicts the cost of condos will increase 2.3 percent over the same period.
This marks a slowdown from recent annual increases of four percent or more.
The report said that around one-fifth of individual homes in Switzerland are in markets that are overheated because of high prices and rates of construction.
Such markets include the Zurich basin, the Lake Geneva area, municipalities with low taxes and coveted tourist areas.
The average transaction price for a typical villa in Switzerland was 825,000 francs in the second quarter, unchanged from earlier in the year.
But prices were more than double this in Geneva (2.36 million francs), Zurich (1.99 million francs) and resort communities such as Verbier (1.72 million francs).