Housing Shortage Worsens – Rents Tell Only Half the Story
Vacancy rates fall, apartment hunting becomes harder, and asking rents rise. At the same time, the low reference interest rate slows rent development for existing tenancy agreements.
Key Figures
- 1.00 percent: This was Switzerland's residential vacancy rate on June 1, 2025.
- Around 48,500 apartments: were vacant then – five years prior, it was 1.72 percent of the housing stock.
- 1.25 percent: The mortgage reference interest rate has been 1.25 percent since September 2025.
- 2.4 percent: The FSO rent price index rose by an average of 2.4 percent in 2025.
- 88 percent: of the measures in the Action Plan on Housing Shortage are now implemented or in progress.
The Housing Market Tightens Again
The easing in the Swiss housing market in 2024 was short-lived. Since 2025, the balance between supply and demand has worsened again. The Federal Office for Housing (BWO)'s current housing market monitor shows that the number of available apartments continues to not keep pace with household growth.
The shortage is particularly severe in the lower price segment. For households with low purchasing power, the situation is as tense as it has been since 2014, according to the BWO. Urban areas and individual tourist regions are particularly affected. Geneva, Zurich, Zug, and Lucerne are among the tight markets, as are several regions in the Bernese Oberland and Graubünden.
Therefore, the problem is not just the level of individual rents. The crucial factor is finding a suitable and affordable apartment at all.
Vacancy Rates Have Been Falling for Years
A key indicator of housing scarcity is the vacancy rate. On June 1, 2025, approximately 48,500 apartments in Switzerland were vacant. This corresponded to a rate of 1.00 percent. Five years prior, it had been 1.72 percent.
In 2025, vacancy rates were particularly low in Geneva at 0.34 percent, followed by Zug at 0.42 percent, and Zurich at 0.48 percent. Obwalden, Schwyz, and Graubünden also showed very low rates.
For 2026, the BWO expects a further decrease in the vacancy rate, albeit at a slightly slower pace. A nationwide easing of the situation is not yet in sight.
Why Rents Are Not Exploding Everywhere
At first glance, the figures seem contradictory: The housing market is tightening, yet the rise in the official rent price index for 2026 is expected to be significantly lower than in previous years.
One reason for this is the mortgage reference interest rate. It has been 1.25 percent since September 2025. This value influences the permissible rent development for existing tenancy agreements.
The FSO rent price index still rose by an average of 3.2 percent in 2024. In 2025, the increase slowed to 2.4 percent. For 2026, the BWO expects a significantly lower increase due to the now decreased reference interest rate.
This is the crucial difference: The development of rents in existing contracts is not the same as the situation for people currently looking for an apartment.
Therefore, those who have lived in an apartment for a long time may have a relatively stable rent burden. However, those who need to move or are looking for an apartment for the first time face a significantly tighter market.
Asking Rents Continue to Rise
The difference becomes particularly clear when looking at asking rents. These are the prices of apartments currently newly offered on the market.
According to the BWO, asking rents have been rising for about five years. Although the increase has recently slowed somewhat, in the second quarter of 2026, asking rents were still higher than in the corresponding period of the previous year.
For apartment seekers, this means: The market may calm for existing tenancies, while a new apartment remains expensive.
The Real Problem Lies with Supply
Behind the tense situation is primarily a structural problem: Not enough apartments are being built to keep pace with household growth.
New construction production has significantly decreased. While over 53,000 apartments were newly built in 2018, this figure dropped to around 46,700 in 2023 and just under 40,000 in 2024.
At the same time, there are initial signs of improvement. Building permits have slightly increased again since late 2023, and a more pronounced acceleration was recently observed in building applications.
This could lead to higher construction production starting in 2027. However, according to the BWO, the current development is not yet sufficient to eliminate the demand surplus for 2026.
Why More Is Not Simply Built
Demanding more apartments is politically easier than actually building them. In many regions, building land, infrastructure, and available areas are limited. Simultaneously, planning and approval procedures can take a long time.
The Federal Council therefore aims to accelerate these procedures. Among other things, they are examining stronger emphasis on internal development as a national interest, and restrictions on certain appeal options against construction projects. The Federal Department of the Environment, Transport, Energy and Communications is to prepare a corresponding consultation draft by the end of 2026.
However, the Confederation itself points out that its capabilities are limited. Spatial planning and building permits largely fall under the competence of the cantons and municipalities.
Politics Already Has an Action Plan
The political discussion is not just beginning now. In 2024, the Confederation adopted an action plan against housing shortages, comprising a total of 35 measures.
The second implementation survey shows that 88 percent of the measures are now implemented or in progress. Nevertheless, 76 percent of the surveyed stakeholders assess the situation as increasingly tense.
This highlights a fundamental problem of housing policy: Measures can be decided and implemented without their effect immediately becoming visible in the housing market.
Several years can pass between a change in building regulations, an approved project, and the actual availability of an apartment.
More Non-Profit Housing as Part of the Solution
Another approach is the promotion of non-profit housing construction. The Federal Council intends to increase the revolving fund ("Fonds de Roulement") by 150 million Swiss francs for the years 2030 to 2034.
Through this fund, non-profit housing developers receive repayable loans for new constructions, renovations, the purchase of properties, and the acquisition of building plots.
Proponents see this as a way to secure affordable housing in the long term. Critics, however, focus more on additional private construction activity and better framework conditions for investments.
More Regulation or More Homes?
This is precisely where the political dividing line lies.
Tenant organizations demand, among other things, stronger protection against abusive rent increases, stricter rules for terminations, and further interventions in the rental market. Representatives of the real estate and construction industry, however, argue that additional regulation does not increase supply and can hinder investments in new housing.
Both approaches are also found within the Confederation's Action Plan: on the one hand, measures to increase housing supply are discussed, and on the other hand, demands for stronger tenant protection.
Therefore, the debate is not just a question of tenancy law. It is a fundamental question about how Switzerland can create more housing without further tightening the existing housing market.
The Next Few Years Will Be Decisive
Rapid easing is not currently expected. The BWO anticipates that the vacancy rate will likely decrease further in 2026. At the same time, housing stock growth remains too weak to fully absorb demand.
Increasing building applications and permits offer some hope. If these actually lead to more new constructions, the situation could gradually improve from 2027.
Even then, however, the problem is unlikely to disappear. The BWO assumes that the housing supply will remain under pressure in the medium term with continued household growth. Especially in densely populated regions, additional housing must increasingly be created through densification.
What This Means for Tenants
For people with an existing tenancy agreement, the situation is currently less dramatic than the discussion about housing shortages might suggest. The low reference interest rate dampens the development of existing rents.
The situation is completely different for apartment seekers. Those who need to move, require a larger apartment for a family, or relocate to a high-demand region for professional reasons encounter a market with limited choices and correspondingly high asking rents.
This also explains why general rent price development and personal perceptions in the housing market can differ significantly.
Switzerland Does Not Have a Uniform Rent Problem – It Has a Supply Problem
The current development cannot be reduced to "rising rents." The real burden arises from the interplay of tight supply, falling vacancy rates, and rising prices in the market for new tenancy agreements.
At the same time, the low reference interest rate currently prevents an even steeper rise in existing rents. This provides a certain stability for many existing tenancies but does not solve the problem for those seeking an apartment.
Politics has now initiated numerous measures. However, it will be crucial whether these actually result in additional apartments. Ultimately, the easing of the housing market is not determined by the number of political initiatives, but by the number of apartments that actually become available on the market.
Therefore, no all-clear signal is in sight for 2026. A possible turnaround in new construction is expected in the coming years at the earliest.
Sources
- Federal Office for Housing (BWO): Housing Market Monitor 2026
- Federal Office for Housing (BWO): "The Housing Market at a Glance," Issue III/2026
- Federal Office for Housing (BWO): Action Plan for Housing Shortage, Implementation Report 2026
- Federal Office for Spatial Development (ARE): Measures to Accelerate Housing Construction
- Federal Council/BWO: Promotion of Non-Profit Housing Construction
