The cost of renting property in Switzerland has risen by 20 per cent in the past ten years, but prices are set to stabilise, a study has found.This content was published on April 25, 2007 - 10:21
A limited supply of housing and insufficient construction of new properties to rent have kept prices rising, in a country where most people rent rather than buy.
Higher demand from foreign workers for rental property, and economic growth also contributed to the rent hike, according to the annual Immo-Monitoring Swiss construction and property markets report.
Prices in the rental sector have been increasing since 1998, the study prepared by consultancy firm Wüest & Partner shows. Last year, there was a 3.1 per cent rise and a 2.1 per cent increment is expected this year.
Zurich is the most expensive city in Switzerland with regards to rent, with tenants paying an average of SFr1,500 ($1,247). Geneva follows in second place with prices coming in at just under SFr1,500.
Rent in central Switzerland is around SFr1,400 while you have to pay SFr1,250 in the capital, Bern. In the French-speaking part of Switzerland, with the exception of Lausanne and Geneva, average rent costs are around SFr1,000.
Dieter Marmet, one of the report's authors, says rents should increase by a more modest 1.2 per cent in 2008 on average. He rules out a rental market crash similar to what happened in the early 1990s.
Marmet says rents will increase more than prices of houses and apartments to buy, since the construction industry has focused on the latter.
Only around 10,000 of the 42,000 properties built last year were destined for the rental market. According to the report, the number of vacant apartments in this sector stood at 2.3 per cent.
Rental costs of business property have increased at a slightly slower pace over the past ten years, with office and shop prices up ten per cent and industrial real estate up eight per cent.
Marmet says the increase in prices of owned houses and flats is set to slow down as supply meets demand.
"Demand for housing is still strong in Switzerland, but there has been a lot of construction activity which means that supply has risen. Yet, prices will not climb as fast."
Marmet says prices of property for sale should go up by around 0.5 per cent in 2008.
Sale prices for flats have risen by 30 per cent since 1998 and 20 per cent for houses.
According to the report, more than SFr40 billion worth of property will be built this year, of which SFr25 billion is for the housing sector.
About two thirds of the population in Switzerland live in rented accommodation.
According to the UBS Price and Earnings 2006 report, a medium furnished four-room apartment costs $2,550 (SFr3,100) in Zurich and $2,680 in Geneva per month.
A similar apartment in Tokyo would set you back $7,270.
Other cities: London - $6,240; Hong Kong - $4,350; Los Angeles - $4,200; Mumbai - $4,070; Sydney - $3,870; Munich - $2,370; Bangkok - $740.
Zurich and Geneva are ranked 3rd and 4th respectively with regard to wages earned (behind Copenhagen and Oslo).
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