Rents are falling apart in Zurich

Rental prices in the city of Zurich are increasingly dispersed. Long-term tenants sometimes have to put less than 900 francs on the table, while tenants pay 2800 francs net for a three-room flat in a new building, meaning no additional costs. This is illustrated by the current figures of the city of Zurich, evaluated by the real estate appraisal company Wüest Partner and “Tages-Anzeiger”.

Compared to existing leases, new tenants now have to dig much deeper than they did in 2000. Existing rents have increased 42 percent since then. The increase in new rents was almost twice as strong, at 76 percent.

Moderate increase in for-profit housing

That’s why tenants who take advantage of low rents stay in their apartments much longer today. “This will also reduce the increase in current rents,” says Robert Weinert (43) of “Tages-Anzeiger” Wüest Partner.

A person who has lived in a three-room apartment for three to ten years pays an average of 1,800 francs net. If a person has lived in their own apartment for ten to 20 years, this is CHF 1,463. If the lease has been in operation for more than 20 years, an average of CHF 1,259 will be paid per month. An additional 10 to 15 percent is added for additional costs.

The lowest price increases are for cooperative buildings and improvements made by charities: 22 percent since 2000 for two or three rooms. In a four-room apartment, it is plus 35 percent.

High land prices and new buildings raise the price level

Today, a nonprofit three-room apartment costs less than 1,000 francs per month on average. If a tenant has lived in such an apartment for more than 20 years, less than CHF 900 must be paid per month. Cooperative housing is usually slightly smaller. Cooperatives also benefit from discounted land prices.

Anyone who buys land on the open market pays extremely high prices in Zurich, which is reflected in higher rents. However, for-profit providers do renewals much more often so they can raise prices later on. In Zurich, old buildings are often demolished and replaced by new buildings with rents x times higher.

Many existing rents have fallen, thanks to low interest rates in recent years. But that’s the end of rising interest rates: the mortgage reference rate could normalize to 2.5 percent over the next few years, according to the UBS forecast. This means rents could be increased by around 20 percent “depending on the inflation rate” by 2025. (smt)