Is Switzerland’s ‘affordable housing’ really less expensive?
With rent hikes expected to continue into 2024 and beyond, many tenants in Switzerland are hoping to rent cheaper housing alternatives. But do these dwellings really cost less?
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The benchmark mortgage rate, now at 1.75 percent, is expected to climb further in 2024, according to projections by the Raiffeisen bank released on Thursday.
And this is only the beginning, Raiffeisen warned: as landlords often claim cumulative inflation at the same time as raising the mortgage reference rate, the rents will increase more sharply than the 3 percent announced in June: they could go up as much as 8 percent by the end of next year and into 2025.
In other words, rents are expected to go through the roof, no pun intended.
This is obviously bad news for current and future tenants; what complicates matters even further is that, according to the bank’s analysts, tenants will not be able to escape this hike by moving elsewhere, because virtually all rents will experience the same upward trend.
What about the affordable housing options?
These do exist In Switzerland: there is ‘public’ housing, which is owned by municipalities and open to people with lower-than-average incomes.
There are also the so-called cooperative accommodations, where rents are lower than in privately owned buildings, the latter constituting the bulk of rental properties in the country.
READ ALSO: What are Swiss housing cooperatives and can you access them?
However, before you raise your hopes too much, know that there is a number of obstacles, the major one being limited access.
According to Raiffeisen, “finding affordable housing in Swiss cities is as difficult as finding a needle in a haystack.”
Secondly, even if you are lucky, ‘affordable’ apartments may not turn out to be as inexpensive as you may think.
What you should know
Though touted as a more affordable option, when you add up and compare all the numbers, a real picture emerges.
For instance, according to the bank, an 80 to 110-square-metre cooperative flat costs about 1,100 francs a month. The rent in its city-owned counterpart averages at 1,200 francs a month. This type of apartment in a privately-owned building is about 1,400 francs.
But this is where things get more complicated.
In newly constructed housing, which is up to all the modern building standards, rents are quite a bit higher than in older buildings.
In a cooperative built in the last five years, an apartment of the above-mentioned size costs an average of 1,800 francs per month. In the public sector, this figure rises to 1,900 francs — both are higher than privately-owned older buildings.
All this to say that, taking all the variables into account, ‘inexpensive housing’ may not be so cheap in the end.
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The benchmark mortgage rate, now at 1.75 percent, is expected to climb further in 2024, according to projections by the Raiffeisen bank released on Thursday.
And this is only the beginning, Raiffeisen warned: as landlords often claim cumulative inflation at the same time as raising the mortgage reference rate, the rents will increase more sharply than the 3 percent announced in June: they could go up as much as 8 percent by the end of next year and into 2025.
In other words, rents are expected to go through the roof, no pun intended.
This is obviously bad news for current and future tenants; what complicates matters even further is that, according to the bank’s analysts, tenants will not be able to escape this hike by moving elsewhere, because virtually all rents will experience the same upward trend.
What about the affordable housing options?
These do exist In Switzerland: there is ‘public’ housing, which is owned by municipalities and open to people with lower-than-average incomes.
There are also the so-called cooperative accommodations, where rents are lower than in privately owned buildings, the latter constituting the bulk of rental properties in the country.
READ ALSO: What are Swiss housing cooperatives and can you access them?
However, before you raise your hopes too much, know that there is a number of obstacles, the major one being limited access.
According to Raiffeisen, “finding affordable housing in Swiss cities is as difficult as finding a needle in a haystack.”
Secondly, even if you are lucky, ‘affordable’ apartments may not turn out to be as inexpensive as you may think.
What you should know
Though touted as a more affordable option, when you add up and compare all the numbers, a real picture emerges.
For instance, according to the bank, an 80 to 110-square-metre cooperative flat costs about 1,100 francs a month. The rent in its city-owned counterpart averages at 1,200 francs a month. This type of apartment in a privately-owned building is about 1,400 francs.
But this is where things get more complicated.
In newly constructed housing, which is up to all the modern building standards, rents are quite a bit higher than in older buildings.
In a cooperative built in the last five years, an apartment of the above-mentioned size costs an average of 1,800 francs per month. In the public sector, this figure rises to 1,900 francs — both are higher than privately-owned older buildings.
All this to say that, taking all the variables into account, ‘inexpensive housing’ may not be so cheap in the end.
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