How do second homes contribute to Switzerland’s housing crisis?

Experts are noticing a worrying phenomenon that is gaining strength in Switzerland: increasing numbers of main residences are being transformed into second homes.

How bad is this problem?

According to data from the Federal Office for Spatial Development, (ARE) the 10 largest Swiss cities have more than 103,000 second homes. This means these dwellings are used as ‘holiday’ accommodations and no longer rented out to permanent tenants.

Unfortunately, among these 10 largest cities are also those where the housing shortage is most acute.

For instance, Geneva, which has had a historically tight rental market, has a particularly high rate of second homes — 19.45 percent. It is just below the 20-percent threshold, above which the construction of second homes has been banned in Switzerland since 2016.

At the same time, Geneva also has a low number of vacant dwellings — 0.47 percent, according to ARE. This low rate of availability drives the rents upward.

This situation is due to both geography and demographics.

The canton is nestled in the southwest corner of the country, where it is wedged between France and Lake Geneva. The land for new constructions is limited, while the demand is growing steadily.

READ MORE: Why is Geneva’s rent the highest in Switzerland?

The situation is also dire in other high-demand urban centres.

In Bern, second-residence rate is 14.6 percent, and in Lausanne and Basel it exceeds 12 percent.

Zurich’s rate is lower — 9.34 percent. However, its stock of available rentals is extremely low, 0,07 percent, exacerbating the  housing crisis in that city.

READ MORE: How Zurich’s housing shortage sparked massive rioting 

What solutions are being proposed to combat second homes?

Some measures are being called for on the political level.

MP Bastien Girod submitted a parliamentary proposal earlier in March seeking to adapt the current law on second home s– that is, the 20-percent limit — to the context of housing shortage in big cities.

This would involve introducing even stricter thresholds on holiday dwellings.

And the ban should be enforced even more strictly in Zurich and Geneva, where shortages are most serious, he said.

He added that if vacant accommodation falls below 0.5 percent, construction of secondary homes would have to be outlawed altogether. 

For Raimund Rodewald, director of the Foundation for Landscape Protection and Planning, restrictions are urgently needed.

"We are asking that the 20-percent limit for secondary residences be lowered to 10 percent when a city is heading into a housing crisis and can no longer meet the demand for primary residences," he told Watson news platform in an interview. “This would oblige these municipalities to take protective measures for main residences.”

What are the other reasons for the housing shortage in Switzerland?

A combination of several factors has played a role.

One of them is that construction has slowed down across the country — due both to higher costs of materials and scarcity of building land — while the demand for new housing is rising because of the unprecedented influx of foreigners in 2022.

READ MORE: EXPLAINED: How immigration is impacting Switzerland

Unfortunately, this situation is likely to worsen in the near future.

“Switzerland is heading towards a housing shortage of unprecedented proportions,” said Fredy Hasenmaile, Credit Suisse’s real estate expert. “In urban centres, housing is already very scarce. The problem has not yet reached the countryside, but it is only a matter of time.”