Rental flats are getting less and less

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The situation for tenants in Switzerland remains tense. This is the result of a study by Raiffeisen called “Real Estate Switzerland 2nd Quarter”.

According to Raiffeisen, the number of apartments for rent is decreasing day by day in more and more regions. Compared to last year, 33 percent less rental flats are advertised online. No improvement is expected in terms of supply or demand.

Also, investors are not planning to do more construction despite falling vacancies and rents that will soon increase significantly. The reason: rising building prices, rising financing costs and rising administrative barriers.

Empty flats in the wrong place

The vacancy rate is currently 1.31 percent, well above the long-term average of 1.07%. However, such average assessments hide the fact that in some regions the market has already dried up completely. The apartments that are still empty are often in the wrong place.

“By next year at the latest, the vacancy rate should be well below average,” says Martin Neff (62), chief economist at Raiffeisen Switzerland. With the shortage of living space, housing is becoming significantly more expensive for more and more households, especially since the reference interest rate has already been increased several times.

Ways to close the housing shortage

According to Neff, rising housing costs will lead to behavioral changes: for example, by reducing the per capita space requirement. However, in the current market environment, there are many indications that the market cannot solve problems on its own. Therefore, politics is necessary.

“Many unconventional solutions can be considered, from restricting the use of vacation homes and encouraging home exchanges to rethinking monument preservation and liquefying construction land,” says Neff. The housing shortage cannot be resolved without painful weighing of goods and serious concessions.

cooling off in the domestic market

At least the gap between supply and demand is somehow closing in the recently overheated domestic market. Compared to the lowest levels during the coronavirus epidemic, 17 percent more single-family homes and 16 percent more condominiums are currently being offered for sale on online portals than mostly available stocks.

Demand has also fallen. The number of search subscriptions for condominiums and detached houses fell below pre-corona levels. Possibly because single-family homes are still expensive: In the first quarter of 2023 alone, it rose 6.1 percent (condominium 7.5 percent) again from the previous year.

Source :Blick