Real estate market produces too few apartments
Published: Wednesday, Dec 6th 2023, 10:20
العودة إلى البث المباشر
According to economists at UBS, the Swiss real estate market is producing too few apartments. The growth spurt driven by immigration towards a Switzerland of 10 million people lacks the corresponding construction boom. The share of rents in expenditure is therefore likely to rise.
UBS expects Switzerland's population to exceed the 10 million mark by the mid-2030s. Around 9 million people currently live in Switzerland.
Such a high rate of population growth leads to a shortage of land, boosts residential real estate prices and makes rents more expensive, concludes the semi-annual study on the real estate market in Switzerland published on Wednesday.
However, these conclusions are not compelling from a historical perspective. To better understand future developments, the economists take a look back to 1955, when only 5 million people lived in Switzerland. According to the study, rents have risen twice as much as consumer prices over the past 70 years. However, as wages have increased more than rents, housing has become more affordable on balance.
Fewer people live in more comfortable apartments
However, the rising purchasing power of the population has led to an increase in the area per person. Households are inhabited by fewer people, with this figure falling from 2.9 to 2.2. In addition, the quality and furnishings of the apartments have improved, for which tenants were prepared to spend more.
UBS attributes the moderate development of rental prices to two factors in particular: Firstly, enough housing was built in the past to absorb population growth. Secondly, the transport infrastructure has been massively expanded, which has led to commuter flows between cities and conurbations.
Looking ahead, the study is less optimistic. The main driver of the rising demand for living space is migration and no longer the surplus birth rate as in the past. In addition, demand is concentrated in the major economic centers. Due to the high proportion of migrants and the ageing of society, UBS expects an increasing trend towards smaller residential units.
Housing construction lags massively behind rising demand
For an additional million inhabitants, the bank therefore calculates an annual requirement of up to 60,000 apartments by the mid-1930s. However, only 35,000 new units are currently being approved, which does not bode well. The recovery in construction activity is also made more difficult by the fact that the apartments have to be built in existing areas due to spatial planning, which in turn increases construction costs and leads to longer approval procedures.
According to the study, around 150,000 fewer apartments are therefore likely to be built cumulatively than required by 2034. As a result, rents will rise faster than incomes and the proportion of household budgets spent on housing will increase. Rental price growth is likely to be stronger in the centers than in the periphery.
"What has been true for the last 70 years - falling housing costs, greater consumption of space and more comfortable living - is now likely to be a thing of the past," concludes the study.
©كيستون/إسدا
Arabic 
English 
German 
French 
Spanish