Rents have never been higher than this March

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Housing is getting more and more expensive. Across Switzerland, rents rose 0.8 percent at the move-in date at the end of March, thus hitting an all-time high. This is about 5 percent more than the previous year. But that’s not all: rents are likely to increase even more this year. This is the conclusion the Swiss Marketplace Group has reached in collaboration with the real estate consultancy IAZI.

Central Switzerland recorded the strongest increase. Rents rose 2.2 percent in March. Price factors were primarily the economic center of Zug and Lucerne.

Compressing takes time

Central Switzerland has always been attractive in the property market. “The region is highly developed. The tax situation is more advantageous than in Zurich or western Switzerland, says Simon Hurst, 36, consultant at IAZI. The problem: There is almost no room left for more living space in central Switzerland. “Compression is possible, but it takes time and is fraught with conflict,” says Hurst.

Rents in eastern Switzerland rose 1.1 percent. The increase was similarly strong in both the greater Zurich region (+1.0%) and the Lake Geneva region (+0.9%). Both areas are particularly known for their expensive rental apartments.

“More and more people have to spend 35 percent or more of their income on housing. That’s definitely too much,” says Michael Töngi (36), Vice President of the Tenants’ Association (MVS). A quarter of the income would be ideal.

For MVS, the situation is clear: landlord returns have been greatly inflated, especially in urban areas. “The higher the pressure, the higher the return,” Töngi says. But he sees a solution: a rent control that intervenes should the worst happen. It is difficult for tenants to prove that their return is very high.

Many rental apartments in Ticino

But there are regions that are even cheaper: Rent prices in Mittelland were virtually unchanged in March. In northwest Switzerland and Ticino, flats became slightly cheaper: 0.3 percent each. “A lot of rental housing has appeared, especially in Ticino. It needs to be filled first,” explains Hurst. There are many rural areas in northwest Switzerland. “The market isn’t that tight there.”

The decision on the reference interest rate will be made on 1 June. This is likely to increase to 1.5 percent. This means that rents on existing leases can also be increased by 3 percent at the next termination date at the end of September 2023. Therefore, the demanded rents should continue to increase. “It’s easier for the homeowner to justify a higher price,” says Hurst.

As long as there is such a high labor migration in Switzerland, the rental market will remain tight. “Of course we want to stay attractive. But maybe it’s not that attractive – then there’s more space,” says Hurst. One thing is clear: the current housing shortage will not improve with increased immigration. According to a study by Wüest Partner, around 10,000 apartments will be missing by 2023.

Source :Blick