After the severe overcapacity in peripheral locations on residential markets in 2021, the situation across the country eased in 2022. The vacancy rate continued to rise only in the Fribourg and Schaffhausen regions. In all other regions, it declined or stabilised. Demand is boosted by high population growth, supported by continued high immigration: between January and June 2022, net migration among the permanent resident foreign population was about 38,000 (previous year: approx. 26,000). There is also an influx of refugees, particularly from Ukraine. Another reason for the rising demand for housing is the growing number of elderly people and single households in society.

In terms of supply, the decline in new-build activity is leading to an increasing housing shortage – first, as a result of the sometimes huge number of empty properties in peripheral locations in recent years. Second, the construction of apartment blocks has recently become less attractive for many developers because the high demand for land has led to a shortage of available plots and rising land prices. Building costs also increased significantly in 2022. In addition, fixed-interest investments are offering attractive yields again, due to the turnaround in interest rates, reducing investment pressure in the property sector. However, for regions with already tight housing markets, such as Zurich, Zug, Winterthur and Geneva, declining construction activity means rising shortages that are likely to result in an occasionally dramatic rise in rents and the displacement of financially limited tenants to peripheral areas. Increasing political attempts to regulate new-builds, replacement buildings and renovations in major cities such as Basel, Geneva and Zurich also have to be viewed against this background.

Pressure on demand is also noticeable in the owner-occupied segment: although the financing environment has become less attractive due to the rise in mortgage rates, many private property purchases are emotionally rather than financially driven. Therefore, the total number of prospective buyers still outweighs the available supply. Consequently, the level of transactions for owner-occupied apartments and houses remained high in 2022, even though the price growth of recent years levelled off and phenomenal prices were rarely paid. On the other hand, in rural areas and less attractive locations, a marked decline in demand was observed at the end of the year, with prices coming under extreme pressure.