Rents to rise dramatically in Switzerland as cities face housing shortage

Real estate experts have warned that an acute shortage of properties and increased demand will negatively impact the Swiss housing market in the near future. Internal factors like low vacancy rates, coupled with a large number of new refugees from Ukraine, are set to make renting a house or apartment in Switzerland far more expensive.

High demand and low supply affecting rental housing in Switzerland

According to real estate professor Donato Scognamiglio, the housing market is being squeezed by an extremely high demand for houses and apartments. He said that the current market has far too many people fighting over a fast declining pool of rental properties.

Nowhere is this more acute than in Swiss cities, with Scognamiglio noting that the vacancy rate - the percentage of houses and apartments available for rent in an area - is already 0,5 percent in Bern and 0,17 percent in Zurich. In Switzerland, a vacancy rate of below 1 percent is classified as an “official housing shortage” by most cantonal authorities.

Landlords will soon have the right to raise rental costs

Scognamiglio forecast “medium-term pressure towards higher rents,” with landlords likely to raise prices when new tenants arrive. This will be compounded by an expected rise in the Swiss National Bank's reference interest rate over the next few years, which will allow landlords to raise rents by modifying rental contracts in the middle of a lease.

In future, the high demand may be added to by Ukrainians looking to stay in Switzerland permanently. In a warning to Swiss cantons, Scognamiglio said that if Ukrainian refugees are forced to apply for their own private housing in future - which is the plan for most areas - 70.000 prospective renters would be created overnight. In the face of such a sudden and dramatic rise in demand, he concluded that “the housing situation in Switzerland will deteriorate noticeably."