Bank predicts home rent rises in Switzerland

by
Investec
My articles My booksMy videos
Follow on:Twitter

© Jan Gajdosik | Dreamstime.com

According to the bank Raiffeisen, a future rental housing crisis is likely in Switzerland as the home vacancy rate moves below 1% in 2024, reported 20 Minutes.

The combined forces of higher construction costs and higher interest rates have reduced the number of homes being built, said the bank. This combined with the continued growth of the population and a trend towards more living space is expected to create a squeeze as growth in demand outstrips the rise in supply.

Raiffeisen described the situation as an unavoidable crisis, primarily driven by a rental housing shortage. Since the beginning of this year home vacancy rates have fallen from 1.54% to 1.31% across the country. In the cantons of Geneva, Zug and Zurich vacancy rates are already below 1%. Falling vacancy rates have affected rental properties more than homes for sale, said the bank. The shortage of empty homes for rent will inevitably drive rents higher.

Between now and 2024, the nationwide vacancy rate is expected to drop below 1%. Renters should expect a difficult period, said an economist at the bank. Those who move should expect higher rents. And those on existing leases could be confronted with rises as higher mortgage rates are passed on to renters. The reference interest rate used to adjust leases with adjustable clauses in them is expected to rise in the first quarter of 2023. Rents adjusted this way may rise by 3%. Higher maintenance costs may also be passed on to renters adding to rises.