Raiffeisen warns“Switzerland is heading inexorably towards a housing shortage”
According to Raiffeisen, the vacancy rate in all of Switzerland should fall below one percent by 2024. The whole of Switzerland is at risk of significantly higher rents.
It’s about it
According to Raiffeisen, Switzerland is heading towards a shortage of apartments.
By 2024, the vacancy rate in Switzerland should fall below one percent.
Rents are expected to increase significantly.
Living space is increasingly scarce in Switzerland. Vacancies are rapidly decreasing and, as a result, rents are now rising alongside house prices, as Raiffeisen announced on Thursday. In an environment of extremely high building land prices, rigid building and zoning regulations and “a population that is willing to speak up”, according to Raiffeisen, the activity of residential construction has been declining for a long time.
The Swiss population, which is growing dynamically and living on ever larger areas, requires significantly more apartments than are currently available on the market. “Higher interest rates and building prices further reduce incentives to build homes. At the same time, the acute shortage of skilled workers and the war in Ukraine are increasing immigration, which is already high. We are heading full throttle towards a housing shortage,” he said Martin Neffchief economist Raiffeisen Switzerland.
“Tough Times Ahead of Tenants”
The shortage outside of prime locations is an even newer phenomenon in the rental housing market. Due to the boom in the construction of rental apartments in the last decade, until two years ago, the vacancy rate increased continuously. The severe curtailment of housing production that began at the end of the 1910s would now be reflected over time, but all the more clearly in the sparse supply of vacant rental apartments. The national vacancy rate has fallen from 1.54 to 1.31 percent since the beginning of the year.
This record-high decline has particularly affected rental housing, as vacancy in the owner-occupied housing market is already extremely low. “Many regional rental markets already have a housing shortage, some even real housing shortage. For example, the cantons of Geneva, Zurich and Zug have rental apartment vacancy rates well below one percent,” says Neff.
Rents are expected to increase significantly
“By 2024, the vacancy rate across Switzerland should fall below one percent,” predicts Neff. Those who move will soon be faced with significantly higher initial rent. But even with the existing leases, the rent would increase noticeably in the foreseeable future.
In the first quarter of 2023, the benchmark mortgage interest rate is expected to increase to 1.5 percent for the first time due to a significant increase in average mortgage interest rates. The rent, which depends on the current reference level of the interest rate, can then increase by roughly three percent according to the Rent Act. In addition, there is statutory compensation for inflation and general cost increases. According to Raiffeisen, some existing tenants are at risk of a rent increase of up to ten percent by 2024.
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