The bottleneck in the real estate market: How do migrants suffer from housing shortages?

But is immigration eligible for this accusation? To put it bluntly, if I can’t find a house and rents for vacant addresses keep increasing, is it the foreigners’ fault?

The short answer is no. But no it comes with a big but because it’s not that simple. Because the housing shortage is definitely a result of immigration. And a second footnote is explosive: In the past, immigration has already increased rents.

More immigrants than since 2013: around 85,000 people came in balance last year to Switzerland (including short-term residents). This migration movement has been going on for 20 years, albeit to varying degrees. At that time – in 2002 – Switzerland introduced the free movement of people with the EU.

This many newcomers increase the demand for apartments. From 2013 to 2021, two-thirds of new households were created because people moved, as figures from real estate consulting firm Wüest Partner show. This calculation includes movements between cantons, but most of the migration took place across national borders.

Demand increases faster than supply

If the demand for living space increases, the supply must also increase – otherwise a gap will open. Switzerland is in such a situation right now, as there has been less construction since 2003 than ever before: only 42,200 apartments were newly approved last year. It’s like a milk book: with such inequality, housing becomes scarce and rents go up.

However, migration is the most important if not the only cause of the hunger for more living space: Additional apartments are also necessary because we live alone more and more often – and this trend, in turn, is the result of affluence and demographic aging: We can afford our own flats or because our partners have died. they can live alone.

“If we built as much as we did in 2018 and 2019, we would have enough flats despite the high level of immigration,” says Robert Weinert, partner at Wüest Partner.

Free movement of people initially made rents more expensive

Housing shortages and booming rental prices are also home-built – the role played by high levels of immigration is not fully deciphered. This has already been different in the past: A study published at the beginning of the year shows how rents and house prices have risen in the years since people move freely. Researchers at the Universities of Freiburg and Hohenheim explain the price-determining effect of the sharp increase in immigration that Switzerland experienced at the time. In addition, with the EU agreement, well-educated foreigners who could afford expensive apartments and detached houses came to Switzerland – the character of immigration has changed.

But after about a decade, that effect faded: the real estate market has probably adjusted to the now higher demand. In other words, more houses were built.

The current situation cannot be compared with 2002 and later years. At that time, immigration increased sharply. Economically, the real estate market suffered a shock. No surprise today, a large number of well-educated people from the EU have been coming to the country every year for years.

Housing construction continues

Will more apartments be built in Switzerland soon to get the market back on track? It doesn’t look like there will be a trend reversal. Rising interest rates are making new apartment building less attractive, and the real estate industry is complaining about bureaucracy. Rising prices and tight spatial planning make housing construction even more difficult. “At the moment there are almost no signs that residential construction will soon develop more dynamically,” Wüest Partner writes in its March analysis of “Immobilien-Monitor”.

Worries about a housing shortage will likely continue to preoccupy Switzerland after the autumn 2023 elections.