What is the Swiss rental market crisis and what can renters do about it?
Switzerland is often praised for its economic stability, focus on sustainability and beautiful scenery, all contributing to maintaining its high standard of living. But the country is currently grappling with a growing rental market crisis that is making it difficult for renters to find affordable housing, especially in popular areas like Zurich, Geneva and Basel.
Rents are rising sharply, housing supply is struggling to keep up with demand, and strict zoning laws limit new developments. For tenants, this means fewer choices and higher costs, while for investors and policymakers, it raises questions about long-term stability. But is this crisis as severe as it sounds, and what can renters do to navigate it
In this article, we’ll explore the key factors behind Switzerland’s rental market crisis, its implications for tenants, and why Alpine real estate may remain a unique opportunity despite broader market challenges.
Is there a housing crisis in Switzerland?
Renting is particularly popular in Switzerland, compared to many other countries. Nearly 60% of households rent their home rather than taking out a mortgage to buy their own property, leading to intense competition for available rental accommodation. This high demand for rental properties is one of the key reasons why Switzerland is experiencing a significant housing shortage.
According to the Federal Statistical Office, in the past few years, Switzerland has seen a significant decline in the availability of rental apartments and homes. This decline in rental properties began in 2021 and continues to this day. As of June 2024, there were 51,974 vacant homes, accounting for just 1.08% of the country’s total apartment and single-family housing stock. Compared to the previous year, there were 2,791 fewer empty residential properties - a decrease of 5.1%, due to the falling number of rental properties available on the market.
Several factors have contributed to the real estate market crisis, including a housing shortage, population growth and high rental costs, which we'll explore in detail below.
Factors that have affected the Swiss real estate market
Several factors have contributed to the ongoing housing crisis in Switzerland, particularly in the rental sector. A combination of rising rents, regulatory constraints and economic pressures has left many households struggling to afford or find new housing.
High demand but low supply
Switzerland's population continues to rise, driven by its strong economic performance and an influx of foreign skilled workers moving to the country. In 2023, 40% of Switzerland's permanent resident population had a migration background. Population growth has created a significant demand for rental properties, particularly in major cities like Zurich and Geneva. The issue, however, stems from construction activity and the supply of rental homes not keeping up with demand. Since 2017, the number of new buildings has steadily declined, with only 24,200 building permits approved in 2023 - the lowest in 11 years, meaning competition for available rentals has grown. As a result, rents have surged, making it harder for residents to find affordable housing.
Rise in investors
Real estate investors have been playing a growing role in the Swiss property market, acquiring large portfolios of rental properties. This shift has led to a focus on high-yield investments, often at the expense of affordable rental options. Additionally, in prime locations like the Swiss Alps, competition for premium properties has intensified, making availability even scarcer for those seeking rental opportunities.
Inflation and interest rates
Broader economic conditions have also contributed to Switzerland’s rental market challenges. Rising inflation has increased the cost of construction, while higher interest rates have made mortgages more expensive, particularly for low income households. This has led many potential buyers to remain in the rental market rather than purchasing a home, further straining rental supply. At the same time, landlords are passing on increased costs to tenants, contributing to higher rental prices.
What you can do to navigate the tough market
With Switzerland’s rental market becoming increasingly competitive, there are strategies you can adopt to navigate the challenging housing market, including:
- Consider alternative locations: While major cities like Zurich, Geneva and Basel remain highly competitive, you could expand your search to nearby suburbs or smaller towns that offer more availability and affordability. Why not look into scenic alpine locations that provide a quieter and higher quality of life?
- Act quickly: Desirable rental properties receive multiple applications very quickly. Make sure you have all the necessary documents, such as proof of income, references and your deposit, ready in advance. Being prepared can give you a competitive edge when it comes to your rental application.
- Negotiate: With rental prices rising, landlords may be open to you negotiating lease terms, especially for long-term rentals. Offering a higher deposit or demonstrating your financial stability can make your application stand out and improve your chances of approval.
Secure your dream chalet today
If you're struggling to find the right property to call home in the major cities, why not look further afield? The canton of Valais boasts breathtaking views and a slower, more tranquil way of life, with unmissable resorts such as Zermatt, Verbier and Crans-Montana.
If you're looking to buy a luxury chalet of your own, contact us today and the real estate experts at Steiger&Cie Sotheby’s International Realty can help you find the luxury chalet of your dreams.