The rental market in Switzerland is under increasing pressure, and the situation is becoming more dramatic with time, the new real estate report from Raiffeisen Bank indicates.

Even though Switzerland’s population has considerably grown in the recent years — now exceeding the 9-million-mark — which means that demand for housing has increased as well, the supply of available rental units has not kept up with this trend.

In 2022, for instance, only 33,532 apartments were approved for construction. This may sound llike a lot, but according to to the bank’s chief economist Fredy Hasenmaile, this is the worst figure in 20 years.

According to Raiffeisen’s forecast, the number of empty (and therefore available for  rent) apartments will soon fall close to, or even below, the 1-percent mark, for the first time in over 10 years.

Smaller is not better

And residential dwellings that are actually being constructed are often smaller than before: the number of rooms per apartment is falling.

For instance, newly constructed residential buildings in Zurich and Bern consist largely of smaller apartments, which means less living space for families. 

The proportion of newly built flats with more than four rooms fell from 79 to 42 percent between 2002 and 2022.  The number of two- room apartments, on the other hand, rose from 5 to 22 percent.

This trend toward small dwellings further exacerbates the housing shortage, real estate experts say.

Less housing equals higher rents

Housing shortage is reflected  above all in an increase in the rents.

Between April and June of this year, for instance, new rents were 6.4 percent higher than at the same time in 2023, recording the biggest hike in over 30 years.

Raiffeisen’s conclusion: “The asking rents are getting out of control.”

This upward trend affects mostly new tenants, as landlors sometimes raise rents after former tenants leave — a common practice, the ban of which will be one of the subjects of the November 24th referendum.

Why hasn’t housing shortage been resolved yet?

Several factors are at play here.

One is that due to Switzerland’s small size and topography (mountains), land for residential construction is scarce.

Another reason is lack of political action.

According to Hasenmaile, though the federal government has chosen the right approach to spatial planning, the actual implementation by the cantons has been slow — criteria for obtaining building permits are strict, which makes them often difficult to obtain.

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