Housing shortage brings people closer together
Published: Thursday, Nov 9th 2023, 07:50
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Empty and affordable apartments have been a rare commodity in Switzerland for some time now. As a result, asking rents are continuing to rise. This is bringing people closer together.
The Swiss housing market has gone from oversupply to housing shortage at a high and "historically unprecedented speed", write the economists at Raiffeisen Switzerland in the study "Real Estate Switzerland - 4Q 2023" published on Thursday. As supply is not increasing despite high demand, the densification required by spatial planning is inevitably happening on the demand side - via the price.
This leads to constantly higher housing costs, laborious and lengthy searches for housing, drastic compromises in terms of space requirements, location quality and occupancy density or longer commutes for people looking for a home. According to the authors, the result is a loss of prosperity that will continue to worsen as long as 10,000 to 15,000 too few apartments continue to be built each year.
As the new Spatial Planning Act makes it considerably more difficult, and in some cases even impossible, to zone building land, the cities in particular should actually be densified. However, this is being slowed down considerably by a flood of objections, over-regulation in the construction sector, hoarding of building land, a lack of will to upzone in the major cities and, last but not least, rising construction prices and financing costs, according to the report.
According to Raiffeisen, the consequence of this is an "involuntary densification": the lack of living space forces people to use less space and live together in larger households.
Robust home ownership market
Even two years after the end of the low-interest phase, prices for owner-occupied residential property are defying the turnaround in interest rates. According to the data, demand is significantly lower than in recent years and there are also fewer home transactions taking place. In addition, the number of properties offered for sale continues to rise slightly, as does the number of vacant owner-occupied homes.
Nevertheless, supply remains low. As a result, the previously extremely dynamic price growth has only normalized so far. In certain regions, however, property prices have fallen slightly for the first time, even on an annual basis, such as condominium prices in the Bern and Eastern Switzerland regions. In general, prices for condominiums are slowly cooling, according to the study.
"All signs point to a soft landing for the home ownership market, which has been overheated at times in the past," Raiffeisen chief economist Fredy Hasenmaile is quoted as saying in the study. This also includes a few quarters with moderately declining home prices. Raiffeisen expects this from 2024.
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