While many families and individuals will already know the challenges of finding a house or apartment to rent in Switzerland, a new report by Wüest Partner has thrown the vast and growing shortage of housing into sharp relief. Experts predict that Switzerland will need to build over half a million homes in the next 16 years, just to keep up with demand.

New housing construction in Switzerland continues to slow

In the report Wüest Partner revealed that 24.200 permits for new rental apartments were approved in Switzerland last year, the lowest number since 2012. Canton Schaffhausen saw the biggest decline in permits compared to 2022 (-90 percent), followed by Vaud (-46 percent), Basel-Stadt (-39 percent) and Basel-Land (-36 percent).

At the same time, the percentage of homes available to rent has fallen to near-record lows, sitting at 1,15 percent on average - for reference, at the start of 2023 the rate was 4,7 percent. Indeed, a report from Swiss bank and investment firm Raiffeisen recently claimed that the number of homes available on the Swiss housing market is the lowest for 10 years and is leading to significant rental cost rises.

Switzerland needs to build over 500.000 new homes by 2040

Wüest Partner noted that the amount of housing construction has been falling steadily since 2017, calculating that the country will be short of 35.000 homes by the end of this year. In a roundtable discussion on the real estate portal Newhome, consultant Stefan Fahrländer predicted that Switzerland will have to build 522.323 apartments by 2040 if it is to keep up with demand.

Fahrländer went on to note that purchasing property is equally unaffordable in Switzerland, with the average price of apartments in Zurich having risen by 167 percent between 2000 and 2021. As a result of the shortages and the unaffordability of buying a home, he argued that both low and middle-income earners are now competing for the same small supply of rental properties.

Why is the housing shortage so severe in Switzerland?

Wüest Partner explained that Swiss construction firms are struggling to keep up with the high demand for housing, especially in areas like Zurich, Basel, Geneva and other major cities. A decline in land approved for construction, higher interest rates, slower planning permission processes and rising construction and land costs are also putting firms off building affordable housing.

Speaking to the Tages-Anzeiger real estate economist Raphael Schönbächler said that simplifying planning permission, and converting commercial and industrial buildings into homes are all ways for Switzerland to increase its housing supply quickly. Both he and Fahrländer called on the government to do more to expand the amount of land that can be used for new homes, and to put its housing shortage plan into action as soon as possible.