Rising Rents Fuel Booming Roommate Market
Published: Thursday, Oct 26th 2023, 16:20
Updated At: Thursday, Oct 26th 2023, 20:32
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The outlook for the Swiss construction industry remains bleak according to a recent study. High construction costs are leading to fewer projects being undertaken. This means that the supply of housing in Switzerland remains very limited.
People in this area are currently more willing to live in shared housing, according to the real estate consulting firm Wüest Partner in the autumn edition of their "Immo-Monitoring" on Thursday. This means that people must adapt to changing trends.
Last year, the number of newly formed households with at least three people increased more than it had since 2016 (+29,000). According to the study, many people are "forced" into shared living due to the tight housing supply and rising rents.
Experts from Wüest Partner expect the advertised rental prices to continue to increase in 2024, with a 3.8 percent rise.
Continue to buy expensive.
For 58% and 79% of Swiss households with two working people, buying an apartment or a single-family home has become unaffordable.
In the second quarter of 2023, the prices of real estate continued to rise due to the limited supply. Condominiums were 3.4 percent and single-family homes 1.2 percent more expensive than in the same period of the previous year.
The situation varies regionally: In the West and South of Switzerland, for example, owning a home is more affordable, according to experts.
Thanks to the increased interest rates, the increase according to Wüest Partner is weakening. According to the forecast, the purchase prices should only increase slightly in 2024: by 1.2 percent for condominiums and by 0.3 percent for single-family houses.
Business spaces remain in demand.
In the second quarter of 2023, the availability of commercial properties decreased by 2.8 percent compared to the same period in the previous year. This has led to an increase in rental prices, demonstrating the scarcity of such properties.
According to Wüest Partner, this trend is expected to continue in 2024, with a slight increase in office rents of 0.2 percent. In the medium to long term, however, demand for office space is expected to decrease due to trends such as home office, desk sharing and coworking, according to the forecast.
Due to the decreasing purchasing power of the population due to inflation, sales areas in retail and online retail are likely to become less profitable. Therefore, the study authors expect a decrease in rental prices of such commercial spaces of 1.4 percent in the coming year.
There are bleak prospects for new construction activity.
Despite strong demand, a recent study suggests that there is no turnaround in sight for the housing market. Building prices are expected to continue to rise, with Wüest Partner predicting an increase of 1.5 percent by 2024. To meet the demand, more construction activity is needed.
Investment returns are expected to decrease even further, leading to a 0.8 percent decrease in new construction activity, according to the study. This is despite the growing population.
According to the "Immo-Monitoring", the number of newly approved rental apartments in Switzerland in the second quarter of 2023 was 9.5 percent lower than the average of the last ten years. "Realistically, this could mean that construction investments in 2024 will be lower than in 2013," it was said.
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