Swiss real estate market: Why too few apartments lead to rising prices

Swiss real estate market: Why too few apartments lead to rising prices

According to a report by www.tagesanzeiger.ch,

The Swiss real estate market is producing too few apartments to keep up with the increasing population. The UBS experts warn that real estate prices will continue to rise due to the lack of a construction boom.

UBS expects Switzerland to exceed 10 million inhabitants by the mid-2030s, which will lead to land shortages, rising housing prices and higher rents.

Historical data shows that rental prices have risen twice as fast as consumer prices over the last 70 years. However, wages have risen more than rents, making housing more affordable on balance.

The increasing purchasing power of the population meant that households accommodated fewer people, which made it possible to increase the quality of life and furnishings of the apartments. For an additional million inhabitants, UBS expects an annual requirement of up to 60,000 apartments by the mid-2030s. However, only 35,000 new units have currently been approved, which does not bode well for the market.

The construction boom is made even more difficult by the fact that the apartments have to be built in existing areas, which leads to higher construction costs and longer approval procedures.

Overall, the analysis by UBS experts shows that the Swiss real estate market is facing major challenges. There is a risk of a further spiral in housing prices and rents if the supply of housing does not keep pace with the increasing population. These developments could also have a major impact on the market for real estate investors and developers. It remains to be seen how government measures and the construction industry will respond to these challenges.