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Switzerland set to experience housing shortage and (even) higher rents in 2023

Helena Bachmann in Geneva
Helena Bachmann in Geneva - [email protected] • 28 Oct, 2022 Updated Fri 28 Oct 2022 15:09 CEST
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Slowdown in construction is contributing to housing shortage. Image by Tom from Pixabay

After years of oversupply, the Swiss rental market is heading towards a shortage, with dwellings becoming scarcer and more expensive in most cantons.

Experts have been predicting for months a decline in the number of rental accommodations in most parts of the country.

According to Martin Neff, chief economist at Raiffeisen bank, the Swiss rental market is clearly heading towards a shortage. “Vacant housing will soon become scarce”, he warned in August.

Since then, others have reached the same conclusion, as shown by a new market analysis, Immo-Monitoring 2023, carried out by Wüest Partner real estate company.

“We can speak of a large-scale housing shortage in Switzerland”, said Robert Weinert, who carried out this research.

When less than 1.3 percent of dwellings are vacant, as is the case now, it becomes difficult to find a new home in the same canton within a reasonable time, the report found.

And the demand will continue to outstrip supply in the future.

In all, 20 of Switzerland’s 26 cantons will lack sufficient housing next year, including Geneva, Zurich, and Zug, which are among the country’s most populated and industrialised centres.

Bern, Vaud, and Graubünden are also heavily impacted.

Higher rents

Rent in Switzerland already comes out expensive in most international comparisons, but as a result of a very limited (or non-existent) supply, the rents are soaring even higher, with an average increase of 2 percent expected next year.

Graubünden will experience the highest increase— 3.5 percent — with rents in Zurich and Geneva expected to go up by 2.8 and 2 percent, respectively.

Another reason for price hikes is "because building standards are constantly increasing," according to Weinert. “It is therefore becoming more and more difficult to find cheap accommodation”.

At the same time, the cost of heating is also climbing, expected to increase the rent by 5 percent of an average gas- or oil-heated apartment next year, he said.

READ MORE: Switzerland: What can you expect to spend the most money on in 2023

This sudden reversal of the trend can be explained by several other reasons as well.

One, according to Weinert’s analysis, is the increase in construction costs, which has slowed down activity in the sector.

Other factors have contributed to the shortage as well.

One of them is that Switzerland is a small country and building land is becoming increasingly scarce.

Another has to do with demographics.

Studies have shown that rents tend to climb as demand soars, fuelled by increasing migration levels to Switzerland.

"Switzerland has been in a situation of uninterrupted demographic growth for several decades, and this is explained in particular by the arrival of young migrants, who also contribute to the Swiss birth rate”, according to Philippe Wanner, professor at the Institute of Demography and Social Economics at the University of Geneva.

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Helena Bachmann in Geneva 2022/10/28 15:09

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