After an increase of 2.3 percent in 2012, average rents for flats are forecast to rise a further 1.6 percent in 2013, real estate consultants Wüest & Partner say in a report released on Tuesday.

The higher rents are expected, although the rate of increase should slow due to an increase in home construction, the company said in its “Property Market Switzerland” report.

“Inward migration from abroad, which remained at a persistently high level in 2012, continues to represent the main driver for residential demand,” it said.

The Swiss economy continues to support demand for housing also with a moderate — but by international standards solid — growth path.

The country’s Gross Domestic Product is expected to grow between one and 1.5 percent this year following an estimated expansion of one percent last year.

At the end of 2012, around 75,600 homes were under construction, a 2.5 percent increase from the previous year.

The increase in supply is expected to reduce the upward pressure on rents in parts of the country.

But in the Lake Geneva and Zurich regions, where demand continues to outstrip supply, rents are expected to rise 2.5 percent and 2.4 percent respectively.

Expats who have recently arrived in the country face having to pay higher than average because of a division in the residential market.

Rents under existing agreements, which are linked to low mortgage rates, have remained on a downward trend, Wüest & Partner note.

But asking rents and rents under new lease agreements have risen 25 percent and 13 percent respectively since 2005.

The report predicts that the price of condominiums (owner-occupied apartments) will rise an average of 0.9 percent, which represents a slowdown from recent years.

“Booming housing markets such as Geneva, Lausanne, Vevey and Saanen have recently recorded below-average price increases,” it said.

And in Central Switzerland asking prices are currently “moving sideways at high levels”.

Meanwhile, policies introduced last year to dampen the Swiss mortgage market appear to have had little impact on curbing demand for home ownership, the report said.

Single-family house prices increased in all cantons in 2012 and the asking price index continued to rise in the first quarter of this year, although at a slower pace.