Role of foreigners in housing shortage examined

This apartment block was built in Geneva in 1971 RDB

Many Swiss blame the influx of highly qualified foreigners for the current housing shortage in the country and the rise in rents over the past few years.

Two recently released studies, one by the liberal think tank Avenir Suisse and the other by the Federal Housing Office, have examined the basis for this perception.

In the past,  foreigners have often been accused of  “stealing” jobs from Swiss citizens and for bringing salaries down. But over the past few months the focus “has shifted from jobs to housing”, says Gerhard Schwarz, head of Avenir Suisse.

“That is why we wanted to study the impact immigration might have had on housing prices in Switzerland as part of a study of the middle class which will be published in 2012.”

“Immigration, housing and prosperity” looks at the housing market from 1970 onwards, and shows that foreigners are not responsible for the shortage of accommodation. However, they do exacerbate an inherent problem, the report says.

The Housing Office study, released a few days earlier, offers a different analysis. It covers the years 2005 to 2010, and it does show a correlation between the free movement of people – an agreement with the European Union, in force since 2002, allowing Swiss and EU citizens access to each other’s job markets – and increases in rents and the shortage of housing.

More foreign households

All the experts agree that the areas worst hit by the lack of housing and the rise in rents are the Lake Geneva area and the Zurich-Zug region.

The Housing Office says rents in Switzerland as a whole have gone up on average by 8.4 per cent since 2005. In Zurich the rise has been 10.35 per cent, and in the French-speaking part of Switzerland 11.75 per cent.

Although it cannot say precisely how much of this can be attributed to foreigners, given the increase of the number of foreign households  the study concludes that there is a “certain correlation” between the two. The border cantons in particular have seen more foreign residents.

Avenir Suisse, and the author of its study Patrik Schellenbauer, a housing market specialist, take a different angle: they compare the rise in rents, the increase in the amount of accommodation available and the rise in purchasing power in Switzerland. Their analysis shows that while rents have increased, salaries have gone up more.

Since 1970, rents have risen by 38.5 per cent, or 0.8 per cent a year in real terms – taking into account the rise in the cost of living. Avenir Suisse describes this as “modest”, since in the same time the population has grown by 27 per cent and real salaries by 65 per cent, or 1.3 per cent per year.

“Greater comfort”

“Even if the middle class has lost a few percentage points in global growth, rents remain affordable for all segments of the population,” Schellenbauer says.

In 2006 and 2008, 15.8 per cent of the gross income of the average Swiss household went on accommodation and energy. The rise in prices is the result of “a major increase in comfort”, such as larger flats.

However, the real rise in rents over the past ten years was 2.5 per cent a year, because housing construction stagnated. Demand has shifted from the countryside to the large cities and their suburbs “where building is more expensive and subject to stricter regulations”.

Avenir Suisse estimates that in a city like Zurich, more than 75 per cent of the population are “protected against price rises”. Around a quarter live in cooperatives, 12 per cent are home owners, and more than 40 per cent are “captive” and stay in the same accommodation for years, or even decades with only small rent increases.

“The housing policy in large cities is historically oriented towards low income households,” Schellenbauer writes. “So the middle class Swiss city dweller feels under pressure,” even if rents in the major cities tend to be too low, he says.

Newcomers, who may be Swiss or foreign, are forced to turn to newly built or recently renovated housing. And in this segment prices have indeed shot up, he says.

Cooperatives hit back

The study is critical of the incentives given to housing cooperatives, which it says deprive  the local community as a whole of tax income and hamper the mobility of tenants.

The Swiss Tenants’ Association issued a statement hitting back at Avenir Suisse’s claims.

“Unlike private managers, cooperatives do not look for a profit from the flats they let, and that enables them to bring down the rents. The profiteers are certainly not people living in cooperatives, but private owners who are looking for hefty profit margins in the city centres.”

The association has launched campaigns in a number of cantons demanding new regulations for the housing market in order to end the shortage. One recurring proposal, already accepted by voters in canton Zug, is to create zones with minimum quotas of low rent housing.

There is one point on which everyone agrees: more homes need to be built. For Avenir Suisse there is no way of avoiding a heavier concentration of the population in urban centres.

That is the only way to preserve land and the countryside while still welcoming the new highly qualified immigrants on whom  Switzerland depends if it is to maintain its material prosperity, it says.

Housing shortage

According to the Federal Statistics Office, the region around Lake Geneva is the most difficult for finding accommodation.

In 2010 the rates of vacant accommodation were as follows:

Lake Geneva region: 0.57%

Zurich: 0.63%

Central Switzerland: 0.71%

Ticino: 0.72%

Northwest: 1.09%

East:1.28%

Plateau: 1.32%

Study findings

The Federal Housing Office says:

“In 2010 the growth in the number of new constructions was greater than the increase in the number of households. At the end of 2010, there were 67,000 housing facilities under construction, a figure which had not been achieved for 15 years”.

It expects the market to ease in 2011. But many of the new buildings were built to be sold. “The question of a healthy balance between renting and buying will still be an issue.”

(Translated from French by Julia Slater)