People must come together: Housing market tilting at ‘historically unprecedented speed’

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All under one roof! The number of people per household in Switzerland increased for the first time in a long time last year. Acting together is not entirely optional. Much more than that, because living space is becoming increasingly affordable.

The Swiss housing market is heading from oversupply to housing shortage at a high and “historically unique pace”, economists from Raiffeisen Switzerland write in the study “Swiss Real Estate – 4Q 2023” published on Thursday. Since supply does not increase despite high demand, the concentration required by spatial planning inevitably occurs on the demand side – on price.

Housing shortage is increasing

This leads to ever-increasing housing costs, laborious and long-term accommodation searches, serious compromises in terms of space requirements, location quality and occupancy density, or longer journeys for people looking for accommodation. The result, according to the authors, is a loss of welfare that will worsen as long as too few 10,000 to 15,000 apartments are built each year.

Cities in particular need to be densified, as the new spatial planning law makes it significantly more difficult, and sometimes even impossible, to open up development areas for development. However, this is said to have slowed down significantly due to numerous objections, excessive regulations in the construction industry, hoarding of construction land, reluctance to increase zoning in major cities and recently rising construction prices. and financing costs.

involuntary compression

The result of this, according to Raiffeisen, is “involuntary concentration”: Lack of living space forces people to use less space and gather together in larger households.

Even two years after the end of the low interest rate phase, owner-occupied housing prices are defying the interest rate reversal. According to the information obtained, demand is quite low compared to recent years and fewer home transactions are being carried out. Additionally, the number of properties offered for sale and the number of vacant homes continues to increase slightly.

Demand for houses is decreasing

However, supply still remains low. Therefore, the previously extremely dynamic price increase has only normalized so far. However, in some regions, such as condominium prices in Bern and Eastern Switzerland, property prices fell slightly on an annual basis for the first time. According to the research, apartment prices in general are decreasing slowly.

“All signs point to a soft landing for the domestic market, which has at times overheated in the past,” Raiffeisen chief economist Fredy Hasenmaile said in the study. This also included some quarters with modest declines in home prices. Raiffeisen expects this from 2024.

(SDA/dvo)

Source : Blick