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Zurich residents concerned about being ‘pushed out’ of city

A recent survey of 10,000 people shows that the housing shortage remains a huge concern for the Zurich population.

Published: 31 May 2023 11:32 CEST

Zurich residents concerned about being ‘pushed out’ of city

The Church of St Peter in Lindenhof, Zurich, Schweiz

According to the survey by the Tsüri.ch portal, 60 percent of participants assume they will not be able to find another apartment in Zurich the next time they move, while three quarters expect that they will eventually end up having to move to a nearby suburb or a smaller city such as Baden, Winterthur or Schaffhausen.

READ MORE: Five commuter villages near Zurich where it’s easier to find an apartment

And 92 percent of respondents are concerned about rising rents; half said their rents are too high – on average, they pay about 650 francs too much per month.

There have been frequent reports of Zurich residents – young and elderly – being forced out of their apartments for a number of reasons, including higher rents and making room for refugees and migrants. While some choose to turn their backs on the city, many residents feel their hands are tied.

Their reason for staying? For one, the sheer lack of (affordable) housing available in Zurich. Moreover, Zurich households that have not changed residence for a long time pay less rent than those who move around.

READ MORE: Renting in Zurich: Why sticking to one apartment will save you money

In Zurich, everyone is affected by the rapidly increasing rents, including families, students, single parents, poor, middle-class singles, pensioners, migrants and even businesses.

Earlier this year, the Limmattaler Zeitung reported that musical merchandise retailer Musik Hug has decided to terminate its rental agreement which ends in 2025. The retailer had rented the premises at Limmatquai 28 for an astounding 150 years.

According to the survey participants, responsibility for the housing crisis lies with politicians, who have not undertaken any effective measures to remedy the situation.

Investors such as banks and pension funds, which own many residential buildings, are also to blame, respondents said, as they continue to raise rents in order to achieve higher returns.

READ ALSO: Zurich hit by affordable housing shortage amid record-high immigration

As for the solution to the housing shortage? The survey’s 10,000 respondents agreed on a number of solutions, such as capping rents, providing more cooperative and city apartments, controlling returns, banning Airbnb, and expropriating Credit Suisse properties.

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Zurich tops worldwide ranking of cities at risk of housing bubble

The UBS Global Real Estate Bubble Index 2023 found that only these two cities remain in the bubble risk category, down from nine cities a year ago. Zurich had the highest score of 1.71, while Toyko scored 1.65

It means that house prices are grossly overvalued in Zurich. But, according to the study, rental prices in the Swiss city are rising even faster than real estate. Rent increases of five percent are possible in the next years, UBS real estate experts say.

In the comparison of 25 cities worldwide, home prices fell by five percent between mid-2022 to mid-2023.

Last year, Toronto topped the ‘bubble risk zone’ in the ranking complied by UBS. It was followed by Frankfurt, Munich, Hong Kong, Vancouver, Amsterdam, and Tel Aviv. Although property in these cities remain high, they have dropped into the ‘overvalued’ category as the price boom has ended, according to UBS.

The housing markets in Miami, Geneva, Los Angeles, London, Stockholm, Paris, and Sydney remain overvalued according to this year’s ranking.

The financial giant put the movement down to the surge in inflation and interest rates which have “led to a sharp decline in imbalances in the housing markets”.

However, UBS points that these changes have not been enough to “meaningfully improve affordability”.

On average, the amount of living space that is financially affordable for a skilled service worker is still 40 percent lower than before the pandemic began.

UBS added that the next property boom is already on the horizon as housing shortages get worse and fewer building permits are issued, particularly in European cities.

Matthias Holzhey, lead author of the study at UBS Global Wealth Management, said: “Housing demand continues to accumulate and prices may rebound as soon as financial conditions for households improve.”

What’s happening in Zurich’s housing and rental market?

A housing bubble is a market condition where prices rise beyond what most believe is reasonable or sustainable.

UBS found that home prices in Zurich continued to rise in 2023 even if it has been a slower pace than previous years.

Compared to 10 years ago, prices are now 50 percent higher. Property owners have no pressure to sell, which is why prices remain high, according to UBS real estate experts.

READ ALSO: Where property prices are rising the most in Switzerland

However, due to rising financing costs with higher mortgage interest rates, the supply of properties for sale has increased. Plus, there is a lot of construction going on in Zurich. UBS therefore assumes that the price hikes will stablise and the risk of a bubble will decrease, with Zurich likely to come out of the bubble zone in two years.

Meanwhile, rents have “accelerated sharply”, according to the ranking – and have even risen faster than house prices.

Compared to the previous year, rents are now nine percent more expensive – the strongest hike in Switzerland.

Rental prices are likely to remain high due to the lack of housing and population growth. Price increases of three to five percent are possible per year, said UBS.

READ ALSO:

What’s happening elsewhere in Switzerland?

According to UBS, house prices in Geneva are less than 20 percent higher than 10 years ago and stagnated between mid-2022 and mid-2023.

“Although the city benefits from its international status, the economic outlook is mixed, and population growth remains subdued as out-migration to more affordable regions is significant,” said UBS in the study.

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