Switzerland is suffering from a severe housing shortage, despite the lowest interest rates in years and falling construction costs.
Complex building laws and reams of red tape are among the factors deterring potential investors from funding new housing projects.
Finding somewhere to live in Switzerland without contacts or the necessary cash to become a homeowner can be an uphill struggle, with properties for rent scarce nationwide.
At the beginning of June 2002, there were a total of 31,300 vacant properties for rent, 4,400 fewer than the previous year.
And the numbers are continuing to fall. According to the Federal Statistics Office, less than one per cent (0.91 per cent) of properties in Switzerland are currently available for rent, down from 1.04 per cent in June 2002.
The city of Geneva is experiencing the worst housing shortage, with only 0.17 per cent of properties up for rent, followed by Zug (0.30 per cent) and Zurich (0.35 per cent).
According to the Federal Statistics Office, the main reason why so few new properties are being built is because investors are reluctant to put money into the housing market.
“The number of new constructions continues to be low because investors haven’t forgotten the property crisis in the nineties,” says spokesman Ernst Hauri.
“So they are still hesitant about putting their money back into this market.”
Paradoxically, economic conditions currently favour property investment: interest rates are low and construction prices are being forced down.
Furthermore, the housing sector generally offers stable and reliable revenues over the long term. But these positive indicators haven’t been enough to attract investors.
For Christophe Reymond, secretary of the Swiss Association of Property Agents, there are many reasons why investment in new residential properties is low.
“The revision of leasing laws, general property legislation and complicated construction and property management regulations have contributed to the current crisis,” Reymond told swissinfo.
Jean Pfitzmann, vice-president of the Association of Swiss Pension Funds, also believes the biggest obstacle to new buildings is complicated building legislation.
“We have been waiting three years to get approval for a construction project in Zurich,” he said. “Such delays put investors off funding projects that are still waiting for planning permission.”
Luc Recordon of the Swiss Tenants Association believes, however, that the blame for the lack of new housing lies with investors rather than legislation.
“It’s misleading to say it’s down to tenancy laws,” said Recordon. “I think it’s more a case of investors continuing to hold out for a stock market recovery, instead of rethinking their investment strategy.”
But Pfitzmann disagrees: “There are not enough properties on the market to meet demand. Most pension fund investors are looking for the same type of property: mainly mid-range rentable places in city centres.”
While opinions may differ over the reasons behind the shortage, all sides agree that the need to find a solution continues to grow, with the number of residents in Switzerland on the rise.
In canton Vaud alone, some 100,000 new residents are expected over the next 15 years.
swissinfo, Jean-Didier Revoin (translation: Joanne Shields)
According to the Federal Statistics Office, less than one per cent of properties are currently available to rent.
The statistics office says this is because investors are reluctant to put money into projects to build new properties, following the property market crisis in the 90s.
Some property associations believe investors are put off by complicated construction and leasing laws.
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