The property professionals’ solution

In this article, you will discover the main challenges of the housing crisis in Switzerland and Europe, its causes, and possible solutions.

Household structure and housing occupancy in Switzerland

The most common apartment size in Switzerland ranges from 4 to 4.5 rooms. Around 40% of the population live in dwellings with a living area between 71 and 110 m², of which nearly 20% fall between 71 and 90 m². On average, homeowners occupy dwellings with larger living spaces than tenants.

Two thirds of households in Switzerland consist of couples, particularly in the 36 to 55 age group. Between the ages of 18 and 35, housing arrangements are more evenly distributed, with comparable shares of couples with children (30%), single-person households (28%), and couples without children (24%). Among those aged 56 and over, nearly half of households consist of couples without children.

Thus, while larger dwellings remain particularly sought after by homeowners, demand is simultaneously increasing for smaller units, especially one-room apartments, among young adults and retired individuals who no longer live with children or as part of a couple.

The housing crisis in Switzerland

The housing crisis in Switzerland is based on two key observations:

• high rents, particularly in urban areas;
• a vacancy rate close to zero.

For example, Zurich has around six available dwellings per ten thousand residents.

Pressure on housing supply

The housing vacancy rate in Switzerland stands at 1%. A rate below 2% indicates a tight market; at 1%, available supply no longer meets demand.

This level means that the number of dwellings placed on the market is insufficient, both for rent and for sale. Demand exceeds housing construction, as current construction and market capacity are unable to restore equilibrium.

Regions under strong pressure

Some regions in Switzerland show vacancy rates below 0.5%, indicating that available supply is virtually non-existent. This situation primarily affects urban areas with a high concentration of jobs, where demand clearly exceeds the number of dwellings being built.

The lowest vacancy rates are mainly found in economic centers and border regions. In these areas, housing is scarce, expensive, and allocated very quickly after being placed on the market.

This imbalance is no longer limited to major cities. It now affects many medium-sized agglomerations as well as certain peripheral areas, indicating a shortage extending across the entire country.

Who is particularly affected by the crisis?

The shortage primarily affects family housing, especially apartments with 3 to 4 rooms. These are the most in-demand and least available properties, which severely limits relocation options for the households concerned.

This scarcity reduces residential mobility and constrains professional mobility, particularly in the case of a job change or a change in family circumstances.

The lack of housing suitable for families has direct effects on social and economic dynamics. It hampers internal mobility, complicates the settlement of newcomers, and makes residential stability more difficult to achieve. At the same time, pressure on rents is concentrated in the intermediate segments of the market, directly weighing on household purchasing power.

A housing crisis at the European level

The housing crisis does not affect Switzerland alone. It impacts the whole of Europe. In the European Union, around 1.3 million people are homeless, which is equivalent to twice the population of Luxembourg.

This situation is part of a context of sharply rising housing costs. Since 2010, property prices have increased by around 60% at the European level, while rents have risen by approximately 30%. Access to housing has thus become a source of insecurity for a growing share of the population. As summarized by Ursula von der Leyen, President of the European Commission: "For too many Europeans today, housing has become a source of anxiety."

Focus on the Netherlands

The Netherlands provide an instructive example for analyzing current imbalances in the European housing market. The country has a high share of social housing, accounting for around 30% of the total housing stock at the beginning of 2025. Despite this proportion, supply remains insufficient to meet demand.

Over the past decade, property prices have increased by around 100% nationwide, with rises of up to 130% in high-demand areas. The average annual income, estimated at 44,000 euros, no longer allows access to home ownership, as the average price of a dwelling exceeds 500,000 euros.

The rental market is subject to similar constraints. In July 2024, average rents increased by 5.4% year on year, marking the strongest rise observed in more than thirty years. The housing deficit is estimated at over 400,000 units. Access waiting times for social housing average seven years nationwide and reach 18 to 19 years in major cities, particularly in Amsterdam.

Search for solutions : public regulation of the housing market

1. Regulation of short-term rentals

Political initiatives, mainly carried by left-wing parties, have led European institutions to engage in a reflection on the regulation of the housing market. In Brussels, the European Commission has developed a European housing strategy.

According to a preliminary version of the plan, the European executive intends to propose a legislative framework aimed at regulating short-term rentals, in particular those operated via platforms such as Airbnb. The objective is to reduce the share of dwellings withdrawn from the residential market, especially in large cities, where these practices are associated with a reduction in the traditional rental supply and an increase in rents.

2. Increase in construction capacity

The regulation of demand is nevertheless not sufficient to absorb the shortage. A second identified priority concerns the increase in housing supply, via the construction sector. The envisaged strategy is based on two main levers :

• to mitigate labour shortages, in particular through training and apprenticeship programmes in construction trades ;
• to adapt certain standards and procedures, in particular environmental and administrative ones, in order to reduce the time required to issue building permits, without calling into question long-term climate objectives.

According to estimates by the European Commission, Europe would need more than two million new dwellings per year to meet current demand and limit the persistence of imbalances on the market.

Potential causes of the crisis

Oppositions

The increase in construction constitutes a direct response to the housing shortage. Yet, since 2023, the volume of dwellings constructed has been decreasing, despite high demand. This decline is explained by a combination of economic constraints, notably the high price of land and the scarcity of available land, and structural constraints, linked to an administrative system that tends to multiply obstacles rather than facilitate the implementation of projects.

Appeals and oppositions play a role in the protection of heritage, the environment and the living environment. However, the current framework allows any person residing within a radius of about one hundred metres from a project to lodge an appeal, which has direct effects on housing production. Procedures are prolonged, construction sites are delayed and costs increase over time. These additional costs are then passed on to rents or lead to the abandonment of certain projects, which aggravates the existing shortage.

The right of opposition must be maintained, as it falls under the protection of the public interest. However, its abuses should be framed, for example through more precise admissibility criteria and proportionate fees. The objective is to preserve democratic control mechanisms without blocking the construction of housing necessary for the community.

Authorisations

A second major obstacle to construction lies in the slowness of authorisation procedures. Whereas a building permit could be issued relatively quickly about ten years ago, delays have often doubled. What previously took a few months now extends over several years.

Each additional year has concrete effects : rents increase, some investors abandon their projects and households remain longer on waiting lists. The lengthening of procedures thus contributes directly to the housing shortage.

This situation is not inevitable. Strengthening human resources in the competent services, better coordination between administrations and a simplification of steps could reduce delays, without weakening legal or environmental requirements.

Demographic growth and economic attractiveness

Pressure on the housing market is also linked to structural factors. Demographic growth, partly fuelled by labour immigration from the European Union and third countries, increases demand for housing. This dynamic concentrates in economically attractive urban centres such as Zurich, Geneva, Basel or Lausanne.

In these regions, the population grows more rapidly than the housing supply, which strengthens market tensions and contributes to rising rents.

Transformation of housing into a financial asset

Finally, housing has gradually ceased to be solely a use value. It has become a financial asset, used as an investment vehicle, a long-term yield product and an instrument for capital preservation.

This evolution influences the nature of the projects carried out. It favours the construction of more expensive dwellings, oriented towards households with high solvency, and contributes to the scarcity of genuinely affordable housing. Even when construction increases, it does not necessarily meet the needs of the households most affected by the shortage, which accentuates the imbalance between supply and demand.

Signs of localised overheating

The risk of a generalised real estate bubble remains limited. By contrast, certain areas show signs of overvaluation. In several urban regions, prices reach levels that are incompatible with the incomes of average households.

This evolution is explained by land pressure, the persistent scarcity of supply and competition between investors, which support prices independently of fundamentals related to purchasing power. Price formation increasingly relies on investment capacity rather than on residential use.

This dynamic deepens territorial and social disparities. The main risk lies in the establishment of a lasting residential divide, in which access to housing depends on solvency and wealth, and no longer on residential needs.

Possible solutions

Policy rate

The policy rate maintained at 0% creates a monetary environment favourable to investment. It reduces the cost of capital, which supports investment in housing construction and lowers the cost of mortgage loans. In theory, this situation facilitates both the financing of new projects and access to home ownership.

However, in a context of housing shortage, this effect mainly acts on demand. When supply remains constrained, low interest rates tend to support prices rather than improve access to housing. The monetary lever can therefore only be effective in combination with measures aimed at increasing supply.

Social housing

The housing crisis affects the whole of Europe, which has led to a strengthening of social housing policies. Several countries have increased public and semi-public investments in order to produce dwellings with moderate rents and stabilise the market in the lower and intermediate segments.

In this context, certain organisations play a key role. Places for People, a social enterprise based in London and active across the United Kingdom, has for example issued bonds on a large scale to finance the construction of affordable housing and improve the energy efficiency of its housing stock.

This type of financing makes it possible to mobilise long-term private capital in the service of social objectives, while increasing the supply of accessible housing. Social housing thus constitutes a tool for the structural stabilisation of the market, in particular for low- and middle-income households.

Partial separation between use value and investment value

Part of the tensions stem from the confusion between housing as a living good and housing as a financial product. Regulatory instruments can limit this tension, for example by framing certain speculative uses or by favouring projects whose purpose is residential in the long term. The objective is not to eliminate private investment, but to rebalance incentives in favour of use.

Conclusion

The housing crisis results from a lasting imbalance between growing demand and insufficient supply. It cannot be explained by a single factor, nor resolved by an isolated measure.Different observations :

• housing production is constrained by land-related, administrative and legal restrictions;
• demographic growth and the concentration of employment intensify pressure in urban centres;
• the transformation of housing into a financial asset reinforces the scarcity of affordable housing;
• favourable monetary policies support demand without correcting supply rigidities.

In this context, an effective response requires coordinated action combining targeted regulation, acceleration of procedures, expansion of supply and the development of housing forms not oriented towards maximum return. Without structural correction, the shortage risks becoming entrenched and reinforcing inequalities in access to housing.

Sources

allnews.ch - Article
watson.ch - Article
allnews.ch - Article
allnews.ch - Article
oaks.ch - Article