Switzerland Housing Crisis: Rental Costs Soar by 30% in 20 Years

The cost of renting a house or apartment in Switzerland has experienced a significant increase of 30 percent over the past 20 years, according to a study conducted by consultancy firm Iazi. As the housing market in Switzerland continues to tighten, the recent rise in the reference interest rate has exacerbated the situation, highlighting the failure of salaries to keep up with the inflated costs. The study, released by Watson, revealed a sharp surge in both buying and renting prices for houses and apartments in Switzerland since the year 2000. During this time period, the cost of purchasing an apartment increased by an average of 94 percent, while house prices rose by 80 percent. Similarly, the cost of renting skyrocketed by 30 percent. Consequently, housing costs have emerged as one of the principal contributors to the escalating cost of living in the country, with other living expenses experiencing an average increase of only 8 percent over the same period. Despite these soaring housing costs, Swiss salaries have failed to compensate adequately, with nominal wages increasing by a mere 24 percent on average between 2000 and 2021. 

Notably, the study undertaken by Iazi highlighted significant regional variations in housing costs, with prices for homes of identical size fluctuating by up to 70 percent across the country. It is essential to consider that this study did not factor in the recent rises in the reference interest rate, which have elevated rental costs for approximately half of the renting population, nor did it account for the prevalent housing shortages observed since 2021. Regarding the factors driving the increasing prices, Iazi identified a rise in affluence throughout the country as a crucial element. This increase in wealth has consequently led to a higher demand for living space. Over the past 20 years, the average living space per person in Switzerland has gone up from 44 to 46 square meters. Additionally, the local tax system and average incomes play a role in driving up housing costs. Iazi noted that areas with lower tax rates tend to boast the most expensive homes since they attract individuals with higher incomes who can afford to spend more on housing. The elevated demand resulting from immigration was also cited as a contributing factor, particularly in destinations popular among expats like Canton Zurich, Vaud, and Geneva.

In conclusion, the study conducted by consultancy firm Iazi highlights the substantial increase in the cost of renting homes and apartments in Switzerland over the past two decades. The surge in housing prices, coupled with the failure of salaries to keep pace, has significantly impacted the cost of living for residents. Regional variations, increases in affluence, and high demand resulting from immigration were identified as some of the core factors driving the rising housing costs in the country. As Switzerland faces ongoing housing shortages and economic challenges, it remains crucial to address this issue to ensure affordable living conditions for its residents.