Unaffordable and scarce The housing situation in Switzerland is escalating
The housing shortage in Switzerland is becoming ever more threatening. How did it get this far?
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- The number of approved building applications has fallen to a record low: Never in the last 20 years have so few apartments been approved.
- New apartments offer fewer rooms on average than before, which is exacerbating the shortage.
- Rents for newly advertised apartments have risen more than they have for over 30 years.
- The federal government and the cantons are blaming each other for the misery.
The rental housing market in Switzerland is under pressure - and the situation is becoming increasingly dramatic. This is how one could summarize the latest real estate report from Raiffeisen Bank, which was analyzed by "Watson". Chief economist Fredy Hasenmaile believes that the Federal Administration, including the Federal Council, is partly to blame.
A look at the facts: In the construction industry, fewer and fewer building applications have been submitted for years and even fewer have been approved. Nobody knows exactly why. And while the causes are still being discussed, approvals fell to a historic low last year.
Less than 1 percent empty apartments
In 2022, 33,532 apartments were approved, the worst figure in 20 years - even though living space is scarce in Switzerland, especially in urban areas. The population continues to grow by around 80,000 people per year, but hardly any new living space is being created.
And what is being built is often smaller than it used to be: the number of rooms per apartment is falling, and today there are usually only three instead of the usual four. This means that not only the housing shortage, but also the shortage of rooms is getting worse.
The shortage is noticeable everywhere. Anyone looking for an apartment on internet portals will find far fewer offers than a few years ago. This month, the Federal Statistical Office will once again publish the vacancy rate. According to Raiffeisen, it could fall below 1 percent for the first time in over a decade.
Offer rents are "getting out of hand"
The shortage is particularly noticeable due to the sharp rise in asking rents - i.e. rents for newly advertised apartments. In the second quarter of 2022, these were 6.4 percent higher than in the same quarter of the previous year, marking the sharpest rise since 1992.
The Raiffeisen economists say that asking rents are "getting out of hand". Initially, this extreme increase mainly affects those looking for a new apartment.
Existing tenancies are not directly affected, as existing rents are linked to the mortgage reference interest rate, which has remained stable recently and could even fall in the coming months according to Raiffeisen forecasts. But as Raiffeisen emphasizes: "High asking rents affect almost all tenants sooner or later."
Careless implementation of the Spatial Planning Act
Demand for housing is high, but supply is lagging behind - not only is not enough being built, but there are fewer and fewer new apartments overall. Yet according to the Federal Council, housing is a "basic need", as stated in the "Housing Shortage Action Plan".
When asked by "Watson", Raiffeisen chief economist Hasenmaile emphasizes that the problem is complex and has worsened over many years, which is why it cannot be solved quickly. Although he welcomes the fact that the federal government is not acting rashly, he criticizes the lack of leadership: "I miss a clearer signature from the federal government."
According to Hasenmaile, the federal government has chosen the right approach to spatial planning, but the implementation has been approached with little foresight or even negligence. The Federal Office for Spatial Development (ARE) only recently admitted that densification was taking longer than expected. Hasenmaile comments: "This could have been known or prepared for."
Confederation shifts responsibility to the cantons
The decision to increase density was approved by the people in 2013, as the previous urban sprawl had swallowed up valuable cultivated land. For example, they wanted to build more apartments on already built-up land.
However, implementing the new Spatial Planning Act is proving more difficult than expected: In cities, the old often has to go before the new can be built. However, the ARE sees the responsibility differently.
Implementation is the responsibility of the cantons, some of which have taken longer than planned to adapt their land-use plans, a spokesperson clarified in response to an inquiry from "Watson". "The reasons for this are varied and have a lot to do with local conditions and personnel resources in the municipalities and cantons."
The federal government as an advisor
The federal government only has an advisory role. Within this framework, the ARE demands consistent implementation from the cantons and municipalities. However, it is not allowed to intervene in the political processes of the municipalities and cantons due to the constitutional division of tasks in spatial planning.
"The theory that the federal government should have done more to implement densification more quickly is therefore wrong." The course towards denser building is certainly progressing.
