By 2025, urban densification will be an essential response to the housing shortage and demographic pressure linked to sustained immigration.
This is indeed a national trend, even if its intensity and implementation vary from canton to canton and city to city.
However, this strategy accentuates the difficulties of access to housing for low-income or financially insecure households, and contributes to new forms of territorial exclusion.
Rising rents, declining affordability
In urban centers such as Geneva, Lausanne and Zurich, densification operations are accompanied by a sharp rise in property values, which has a direct impact on rents. New homes, often positioned in the upper end of the market, are becoming unaffordable for a large proportion of the population, particularly middle-income families.
This trend was confirmed in the first quarter of 2025, when rents for new leases recorded an average increase of +1.8% over the previous quarter, or +2.4% year-on-year. (source : PwC Suisse). This dynamic pushes many residents to the outskirts, reinforcing social and spatial segregation.
A widening gap between tenants
According to the latest data from the Federal Housing Office (FHO), the gap between rents paid by existing tenants and those charged to new entrants has never been wider. In fact, while rents for current leases have risen only slightly (by around 1.1% since 2009), rents charged for newly-let properties have exploded, with an increase of +23.7% over the same period. (source: asloca).
On a national scale, the rent index rose by 38% between 2000 and 2024, well ahead of inflation and wages. (source: bwo.admin.ch).
Family housing is particularly hard hit by soaring rents, with increases far outstripping income growth. This phenomenon is creating a two-tier rental market, to the detriment of young households and vulnerable populations. According to the Swiss Federal Statistical Office, over 8% of the Swiss population lives below the poverty line.
New construction still struggling to keep pace with demand
Although new construction has picked up slightly, it is struggling to keep pace with demand. In 2025, some 49,000 building permit applications were submitted, a figure that is up on 2022, but still below the average needed to stabilize the market. (source: WĂ¼est Partner). Indeed, the strict regulatory constraints on urban planning limit the sector’s ability to rapidly adapt supply.
The rate of growth in the housing stock is stagnating at around 0.9% per year, compared with an average of 1.1% over the previous decade. At the same time, the vacancy rate has never been so low: it fell to 1.08% in June 2024, a critical level that confirms the shortage. (source: PWC).
As a result, construction, although dynamic, is unable to defuse the shortage, particularly in the affordable segments, and the Swiss real estate market remains tight.
Call for corrective measures
Faced with this trend, a growing number of politicians and associations are calling for more proactive regulation of the Swiss rental market. These include setting quotas for genuinely accessible housing, reinforcing the public housing sector, and tightening controls on re-letting rents. Without structural rebalancing, urban densification risks exacerbating social inequalities and emptying city centers of their socio-economic diversity.
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