Those on the lowest incomes in Switzerland are spending over 44 percent of their salaries on rent, the latest study from the Federal Housing Office (BWO) has revealed. They found that a combination of low supply and high demand has left tenants across the country paying more for less.

Tenants in Switzerland paying more for less

In the latest Housing Barometer, the BWO reported that the current situation on the Swiss housing market is “cause for concern." They noted that while the shortage of homes across the country is stable but “very tense”, demand is only easing because of high rental costs.

Shortages were found to be most acute around Aargau, central Switzerland and Canton Zurich. Alongside cities and suburban areas, they found that ski resorts and other areas of the mountains are also beset with shortages. By contrast, Canton Ticino and Jura were found to offer the best conditions for tenants.

The BWO noted that based on their data, there is enough affordable housing in Switzerland to cater to low-income residents. However, because of shortages in low-middle to middle-income housing, more affluent families and individuals are moving into smaller, cheaper homes, driving up prices and making affordable housing extremely hard to find at a good price.

Low-income tenants paying 44,8 percent of earnings on average

As a result, the BWO found that as of 2022, those with a low income in Switzerland (approximately 31 percent of tenants) are spending an average of 44,8 percent of their earnings on renting a house or apartment, up from 40,8 percent in 2018. Rising prices are being felt across the board; the nationwide average cost of a home has risen from 23 percent of annual income in 2018 to 25,4 percent in 2022.

At the same time, rates of housing construction are “clearly too low” when compared to population growth. Though more homes are expected to be built in 2025, “even in the long term, the increase in living space is unlikely to keep pace with strong household growth, given the current densification pattern in construction activity.”

What solutions are being put forward to solve the housing shortage?

The solutions being put forward to address the rising prices are diverse: writing in its latest position paper, the Swiss Association of Master Builders argued that “over-regulation” is making new housing construction harder. They therefore called on more streamlined procedures in getting new homes approved.

"It is particularly difficult to build in cities, there are enormous requirements and it takes ages to get a building permit," Swiss People’s Party National Councillor and president of the homeowners’ association Gregor Rutz told Blick. 

With Switzerland experiencing record population growth, Rutz added that "demand for housing has risen sharply in cities in particular due to immigration. We can only alleviate this problem by regulating immigration." However, with Switzerland set to be short of 460.000 workers by 2035 if immigration is not increased, it is unclear how the country will be able to reduce migration rates while keeping pensions and social services financially healthy.

On the opposite side of the debate, the Swiss Tenants’ Association has recently launched a new referendum which aims to cap how much landlords can earn through rents. Association vice president and Green Party National Councillor Michael Töngi said that alongside capping returns, the solution to the housing crisis can be found in providing more support “to cooperatives and non-profit housing developers.”

In future, he said that Switzerland should designate special zones where only affordable homes can be built, and give local councils a fast-track way to purchase land for development. "We need to set the framework so that everyone can find affordable housing, even as the population grows," he concluded.

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