Homegate Index: Asking rents almost unchanged
In July 2017, asking rents in Switzerland remained largely stable, according to the latest homegate.ch asking rent index, which is compiled by the real estate portal and Zürcher Kantonalbank.
The homegate.ch asking rent index measures the monthly, quality-adjusted change in rents for new and re-let apartments based on current market offers.
Accordingly, in the cantons of Zurich (0.17%), Bern (0.18%), Solothurn (0.09%), Basel (0.09%) and St. Gallen (0.09%), asking rents rose only slightly in July 2017 compared with the previous month. In the canton of Thurgau, rents remained unchanged from the previous month. Rents declined in the cantons of Lucerne (-0.17%), Aargau (-0.45%), Ticino (-0.19%), Geneva and Vaud (-0.24%).
As Homegate and Zürcher Kantonalbank (ZKB) report, rents in Switzerland reached their highest level in spring 2016. By summer 2016, rents had fallen significantly, and then stabilized in the second half of last year. However, the researchers interpret this sideways movement only as a "breather on the way down": In the first half of 2017, the trend was again downward. In Switzerland as a whole, the decline in rents from January to June 2017 was -0.4 percent.
Less immigration, high construction activity
Immigration from abroad decreased significantly in the first half of 2017. According to the Federal Office for Migration, net immigration amounted to 25,500 people, twelve percent below the previous year's figure. This is already the second decline in a row; in the first half of 2015, net immigration was still at 30,200 persons.
On the supply side, there is no sign of a slowdown, according to Homegate and ZKB: The number of planning applications for new apartments suggests that new construction activity remains high. In the first half of 2017, both building permits and building applications for apartments were slightly below the previous year, but historically still at a high level. Due to the investment shortage, construction activity continues to shift from owner-occupied to rental apartments. This is increasing supply in the rental housing market, which is putting pressure on rents. For the coming year, Homegate and ZKB forecast a decline of one percent for the Swiss asking rent index.
