Long-term tenants are hardly affected by rising rents
Published: Monday, Apr 15th 2024, 16:50
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People in Switzerland are concerned about the shortage of living space and rising rents. However, a distinction needs to be made between existing and asking rents. This is because asking rents are particularly affected by the price increase.
Current figures show: Those who have not moved for a long time are hardly affected financially by rising asking rents. This is according to the real estate barometer for the first quarter of 2024 published by Zürcher Kantonalbank (ZKB) on Monday. Housing has only become slightly more expensive in existing tenancies. But there are clear regional differences.
Anyone who has lived in the same rental apartment since 2006 will only pay just under 5 percent more at the end of 2023 than when they moved in, adjusted for quality. ZKB writes this in a study on the development of existing rents, which the bank's real estate research team calculated for the first time on behalf of the Federal Office for Housing (BWO). The growth in rents can be largely attributed to the decline in the quality of apartments - age-related depreciation. However, this was lower than the general price trend in the same period.
Asking rents drive price levels
At the same time, the rent level in all tenancies, i.e. including new lettings, as reported by the FSO with its rent price index, has risen by almost 25 percent since 2006. According to the ZKB, the development of asking rents has proven to be the biggest driver of the price increase.
But there are regional differences. Of all the major regions, existing rents have risen the least in the canton of Zurich. Rents here are only 2.5 percent higher than 18 years ago. An important reason for this is that Zurich tenants were the most likely to demand rent reductions following a fall in the reference interest rate. At the same time, however, landlords were particularly keen to pass on the first increase at the end of 2023.
The situation is different in the Lake Geneva region, where tenants who have lived in the same apartment since 2006 have had to cope with an increase of 7.5 percent. The reference interest rate, which has a significant influence on the development of existing rents in the rest of Switzerland, hardly seems to play a role here. This is probably due to the common practice of subletting in the Lake Geneva region. Subtenants have little interest in demanding rent reductions as they themselves would not benefit from them, writes the ZKB.
Overall, it can be seen that institutional landlords in particular have passed on the numerous reductions in reference interest rates in recent years. As a result, tenants of pension funds, insurance companies and funds have benefited from the fact that their rents have risen less than those of private landlords.
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