Wages are rising faster than rent costs: Zurich residents are not paying more for housing than they did 20 years ago

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Everything is getting more expensive, especially housing. This impression is especially present in Zurich, Switzerland’s most populous canton, where the housing supply is very limited.

But an analysis in the current economic monitor from the Office of Economic Affairs and Labor (Awa) shows that: Zurich residents, on average, are not spending more on housing than they did about 20 years ago. Since 2005, average wages have increased by 18 percent and average rents by 12 percent.

The fact that average rents do not increase more than incomes is also reflected in the fact that the share of rental expenses in gross income has not changed much. For 20 years, a household has spent an average of 22 percent of its income on rent. Although this rate varies widely depending on income, development is relatively stable across all income categories.

Long-term tenants get the best rates

But closer examination reveals big differences: New leases are now about 25 percent more expensive than in 2005. But long-term leases have become cheaper. For example, everyone who stays in the same apartment for twenty years pays an average of 7 percent less than in 2005.

Where you live also plays an important role: rents in the city of Zurich have increased disproportionately compared to the community. This rate is 39 percent for new leases and 15 percent for existing leases. At the same time, people living in the city of Zurich earn disproportionately more today than in 2005.

Housing shortage not solved

The main reasons for the gap in the housing market are the trend towards household downsizing and population and income growth. At the same time, as is known, housing construction activities have decreased in recent years.

“The shortage in the rental housing market is likely to worsen,” says the Economy Directorate. But dense construction is often complex, especially in cities. Many projects will be delayed or blocked due to increased levels of regulation and objection.

In the canton of Zurich, the duration of the approval process has almost doubled since 2010, from 100 days to 180 days. According to the Economy Directorate, faster approval processes and fewer requirements such as noise protection could help increase supply and ease the housing shortage. (SDA/rae)

Source :Blick