A new study from Raiffeisen has suggested that the cost of renting a house or apartment in Switzerland has risen at its fastest rate for over 30 years. The Swiss bank blamed the crisis on a lack of available homes, reduced rates of new construction and the slowness of the government to act to curb housing shortages.

Rental costs in Switzerland rise at rates unseen since the 1990s

According to their data, in the second quarter of 2024, the average rental cost for new apartments in Switzerland rose by 6,4 percent compared to the same period the year before. This amounts to the fastest annual price rise seen since 1992, with the report arguing that “asking rents are getting out of control.”

The bank warned that while those already signed onto rental contracts will not see their rents rise immediately - the reference interest rate that determines rent rises is not expected to increase further - those seeking homes in Switzerland for the first time or relocating for family or work face a dramatically overheated housing market. "High asking rents will affect almost all tenants sooner or later," the report continued.

Swiss housing market: Too much demand, not enough supply

As anyone who has had to queue around the block to get into a house viewing in Zurich will tell you, the causes of the crisis are a combination of too much demand and not enough supply. Raiffeisen noted that in 2023, 33.532 apartments in Switzerland had their planning permission approved, the lowest figure recorded in 20 years and around 27 percent less than usual. 

At the same time, the Swiss population is expected to grow by 80.000 people a year, with the bank now predicting that only 1 percent of all apartments in Switzerland will be vacant and available to rent in 2025. Apartments are also getting smaller, making it harder for families to find affordable options.

Government slow to address the housing crisis in Switzerland

Speaking to Watson, Raiffeisen chief economist Fredy Hasenmaile argued that the housing crisis in Switzerland is long-lasting, very complex and cannot be solved immediately by rash or radical action from the government. However, he said he “miss[ed] a somewhat clearer signature from the federal government - or more leadership - especially since the federal government is not entirely innocent of the malaise."

He noted that the government’s plans to address the housing shortage are too slow and are having to balance other interests - for instance, every year an area the size of Lake Walen is given over to housing instead of agriculture, nature or recreation. The government’s response, a plan to build more densely, has been too slow to be implemented and “was not approached with enough foresight - or even negligently."

In response, the Federal Office for Spatial Development told Watson that it was up to Swiss cantons to enforce the government’s plans, but it had "taken longer than expected.” They added that as the federal government can only advise the cantons, "The thesis that the federal government should have done more to implement densification more quickly is therefore wrong…We are also noticing that dense construction is increasing - so we are on track."