A new study from real estate consultancy Wüest Partner has found that just over a quarter of renters in Switzerland cannot afford to move apartments. They warned that continued rises in the cost of renting a house or apartment have priced many out of relocation, and that the situation will not improve anytime soon.

Is the Swiss housing market sustainable?

In the report, Wüest Partner analysed whether the housing market in Switzerland is “socially sustainable.” To do this, they calculated how many households could afford to rent a similar-sized home, if they had to leave their current rental accommodation for one reason or another.

Affordability was determined by whether a household would be able to rent the same size home without spending more than a third of their salary or income. This was done by comparing average incomes and home sizes to the average cost of apartments currently on the market, showcasing the gap between proposed rents - vacant homes whose price is based on supply and demand - and existing rental costs determined by the reference interest rate.

56 percent of Geneva households cannot afford to move

They found that around 28 percent of Swiss households cannot afford to move homes in 2024. They noted that for single retirees and single-parent homes, this rate rises to 60 percent.

The situation was found to be most severe in Geneva, where 56 percent of households cannot afford to relocate. Moving homes was also found to be unaffordable for 40 percent of tenants in Zug, and 37 percent of renters in Zurich. By contrast, 92 percent of renters in Appenzell Ausserrhoden and 91 percent of Jurans could afford to move homes if they chose to.

Housing shortage in Switzerland expected to get worse

Writing in the report, Wüest Partner noted that the housing situation in Switzerland is set to get worse in 2024. Indeed, a recent report from real estate firm Fahrländer Partner Raumentwicklung (FPRE) found that the average asking rent for new apartments has already risen by 1,5 percent in the first quarter of 2024 - compared to the same period last year, rents have risen by 7,5 percent.

Speaking to Watson, FPRE analyst Stefan Fahrländer noted that “after years of overproduction, too few rental apartments are being built against the background of increasing immigration in recent years. At the same time, there are no signs of a revival in construction activity.” Wüest Partner agreed, noting in the report that in 2023, there were 30 percent fewer homes available for rent compared to 2020.

The number of construction permits given to build new housing also fell to 24.200 last year, 15 percent less than the 10-year average and the lowest number seen since 2012. Wüest Partner added that demand is outstripping supply in most parts of Switzerland, especially in Zug, Schwyz, Nidwalden and Zurich.

Swiss government housing shortage plan heavily criticised 

Now, all eyes will be on the Federal Council and Economic Minister Guy Parmelin’s (SVP) plan to ease the housing shortage, announced in February 2024. However, since the plan’s publishing, many within the media and parliament have argued that the plan is too vague and was too heavily influenced by real estate and construction lobbyists.

This culminated in early April, when elements of the Social Democratic Party demanded that the Federal Housing Office be taken from Parmelin and given to Interior Minister Elisabeth Baume-Schneider (SP). In advocating for the change, national councillor David Roth told Watson that the Economics Minister had focused too much on the financial cost of addressing the shortage: “housing must be managed by a department that thinks from the point of view of people and tenants, not capital.”