Housing Crisis: Swiss Vacancy Rate at Lowest Level in Twelve Years

The Swiss housing market has tightened noticeably in recent years. With a national vacancy rate of 1.0 percent, the Federal Statistical Office (FSO) recorded on June 1, 2025, the lowest value in twelve years. It is the fifth consecutive decline. In urban centers, the situation is significantly more tense than the national average suggests: the city of Zurich reported only 235 vacant apartments on the same date, corresponding to a vacancy rate of 0.1 percent. Economically, a rate below 1.5 percent is already considered a housing shortage; at 0.1 percent, the natural movement of tenants within the city limits has practically come to a halt.

Geneva, Zug and Zurich with the lowest cantonal rates

Zurich is not an isolated case. Among the cantons, Geneva with 0.34 percent, Zug with 0.42 percent, and Zurich with 0.48 percent have the lowest vacancy rates in Switzerland. All three are well below the threshold at which economists speak of a functioning housing market. In cantons such as Jura with 3.03 percent or Solothurn with 2.05 percent, the picture is different; the divide between economic centers and rural regions has widened further.

The consequences are directly reflected in asking rents. Nationwide, advertised rental prices increased by 2.3 percent in 2025, in the city of Zurich by 2.2 percent. Notable here: those who give up their existing rental apartment in Zurich pay on average 33 percent more for the next tenancy than before. This so-called tenancy retention bonus has expanded significantly in recent years; in 2023, the difference between asking and existing rents was only 26 percent.

Too few apartments for too many new households

The shortage has structural causes. Between 2020 and 2024, fewer than 46,000 new apartments were built annually on average in Switzerland; in the previous five years, it was over 51,000. At the same time, about 50,350 new households were added each year, resulting in a persistent supply gap. In the canton of Zurich, the housing construction balance dropped to around 5,200 units in 2025, one of the lowest figures in the past fifteen years.

There is also an ongoing demographic driver. Over the past ten years, the Swiss population has grown by an average of around 81,300 people per year. At the same time, the average household size continues to decrease, further increasing the demand for housing units regardless of population growth.

This causes a spatial distortion: newly built apartments often arise where land is available and political resistance is low, i.e., in agglomerations and peripheral regions. However, demand is focused on the core cities and their immediate suburbs, where shortages continue to increase despite new construction activity.

Purchase Market: Prices Rise for the Fifth Consecutive Year

Those wishing to escape the strained rental market through home ownership encounter a purchase market moving in the same direction. The Swiss Residential Real Estate Price Index (IMPI) of the FSO rose by 4.7 percent in the first quarter of 2026 compared to the previous year. Condominium prices increased by 4.8 percent, single-family house prices by 4.6 percent. In the major agglomerations of Zurich, Bern, Basel, Lausanne, and Geneva, the price increase compared to the previous quarter was 3.1 percent.

A familiar dilemma is becoming more acute for households intending to buy. Banks continue to assess affordability with an imputed interest rate of around five percent. For a single-family home costing 1.2 million francs with 20 percent equity, this requires a gross income of around 200,000 francs to meet the formal requirements. This threshold is out of reach for a growing share of households in economic centers without family support.

Structural Problem, Not a Short-Term Episode

The current shortage is not the result of a cyclical special situation. It is the outcome of a long-standing discrepancy between population growth, shrinking household sizes, and a level of construction activity that cannot keep pace with this dual dynamic. Densified construction fails in many municipalities due to objections, noise and heritage protection requirements, or a lack of available developed land. The densification envisaged in the Spatial Planning Act has, in practice, progressed only sluggishly.

For the mortgage market, this environment means that demand for home ownership remains robust despite high prices and strict affordability requirements. As long as asking rents rise faster than mortgage interest rates, the purchase of home ownership retains its economic appeal for those households able to overcome the entry threshold.

Sources:
FSO / FOH, Vacancy rate drops to 1 percent in 2025 Press release, 9 September 2025
FSO, Vacancy census 2025, Full press release (PDF) 9 September 2025
City of Zurich, Vacancy rate remains at a very low 0.1 percent Press release, 14 August 2025
Statistical Office Canton Zurich, Vacancy figures
Statistical Office Canton Zurich, Housing Construction Activity 2025 February 2026
Zurich Cantonal Bank, Real Estate Barometer Q4 2025 January 2026
Zurich Cantonal Bank, Real Estate Today: Retention Bonus, Densification and Dynamics in the Real Estate Market May 2026
FSO / FDHA, Prices for residential property rose by 1.5% in the 1st quarter of 2026 Press release, 30 April 2026
FSO, Status and development of the population Topic page