After costs rose significantly at the start of June, people who rent a house or apartment in Switzerland may have been hoping that the increase would be the last for a while. Now, sadly, a new forecast from bank and investment firm Raiffeisen has predicted that rental costs will rise again in both 2023 and 2024.
In the study, reported by Watson, Raiffeisen said that the “fire in the roof of the rental market” had only just begun to burn. Their latest forecast predicted that the reference interest rate - which already rose in June, increasing rental costs by 3 percent for half the renting population - would rise again, at least twice.
First, they predicted that "in December, the reference interest rate should rise [from 1,5] to 1,75 percent." This would lead to rental costs increasing by a further 3 percent or more for the majority of tenants in Switzerland, regardless of whether they have already signed a rental contract or are still looking for a place to live. Then, the bank predicted that rates would rise again on April 1, 2024, and perhaps even a third time by the end of next year.
“The officially measured rental price increase is therefore likely to climb to 8 percent next year," the bank predicted, adding that landlords should be able to enforce the new rents without much issue, as there are currently few cheaper options available on the housing market.
In the report, Raiffeisen chief economist Fredy Hasenmaile said that “the rental housing market is increasingly drying up due to high levels of immigration, far too little residential construction activity and the recent brisk establishment of new households." “Only restoring a balance between supply and demand can halt the rise in rental prices across the board,” he argued, calling on the government to provide more incentives to developers to help build more homes.
While the study seems like it seeks to add more doom to the gloom on the rental market, the bank did predict a turn in fortunes for people hoping to buy a house in Switzerland in the coming years. Despite house prices rising by 5 percent over the last year, experts told Watson that higher interest rates will inevitably lead to price “corrections from 2024 onwards”.
Raiffeisen explained that a decline in demand should also help house prices fall in the coming years. However, due to the overall shortage of housing, experts concluded that these declines will be small and slow to be felt.
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