Prices in the housing market are rising and the law of supply and demand is out of kilter. There are many reasons for this. We shed light on the background to this perfect storm that has formed and which, if we do not remain vigilant and take responsibility, will gain significant momentum.

Storm warning 1: no learning from the past

In recent years, the second-home initiative has shown us how real estate prices react when supply is artificially reduced in the face of strong demand: They really exploded, especially in the years 2017 to 2019, when nothing new was built at all. Have lessons been learned and have the conditions been created in the conurbations with high demand so that the supply can grow with the population? Apparently not.

Storm warning 2: It is not the time to rarify building land

The Green Party, with the help of the SP, have in the past launched various cultural and agricultural land initiatives at federal and cantonal level. The unsuspecting electorate adopted some of these toxic initiatives without knowing the consequences for their own housing situation in more detail. Today, for example, cantons with low population growth are instructed by the federal government to carry out rezonings for building land not needed within ten to fifteen years. This affects cantons such as Graubünden and Valais, both of which have seen enormous price increases due to the Secondary Residence Act, much to the chagrin of the local population. But rural cantons such as Thurgau also have to zone out building land in order to reduce the supply. The idea of the bill was to be more economical with existing building land and to use it more intensively. This sounds good in theory and on voting posters, but it corresponds neither to reality nor to the needs of a constantly growing population.

ISOS, the Federal Inventory of Swiss Sites of National Importance worthy of Protection, came onto the scene a few years ago. ISOS was originally intended only for federal buildings. A steep pass to the "Verballenbergisation" of Switzerland, which came in through the back door without the electorate wanting to stay clammy. And above all, a steep pass that talented heritage preservationists have used to inventory most towns and cities and divide them into protection levels. Thus, some windy judges have extended ISOS to private buildings with questionable decisions. And all this without the owners having any possibility to challenge this suddenly imposed protection status. So now, suddenly, private buildings are also affected by townscape protection, small houses in four-storey residential zones cannot be demolished to make way for new housing because the historical significance of, for example, "front gardens where fruit was planted for self-sufficiency during the war" are more important than densification. The protection of a townscape suddenly takes precedence over rezoning and densification, i.e. the better use of existing building zones.

Just how wide open the back door is for ISOS without the knowledge of the population is shown by the action taken by the City of Zurich in 2018, when Heimatschutz was promised that ISOS would be taken into account in the next overall revision of the building zone regulations if it dropped a major blockade on the introduction of the current building zone regulations. Blackmail, nepotism or leftist-green wheeling and dealing: no matter what you want to call it, new housing will be prevented in any case - without a referendum, without sufficient opposition, without the media drawing the population's attention to it.

Furthermore, the Spatial Planning Act has been amended at the federal level and cantons must demand an added value for land use. Depending on the region, twenty to forty percent added value tax is due. This is a measure that makes building land even more expensive. As this regulation was not implemented quickly enough by all cantons, the federal government ordered a freeze on zoning in 2019 in the cantons of Zurich, Zug, Schwyz, Lucerne and Geneva due to the non-existence of a surplus value levy. Eight more cantons have been warned of a ban because they did not adapt their structure plans in time, and other cantons have received strong conditions. Jura, Valais and Baselland had to make major adjustments to their structure plans and show the federal government how they intend to achieve higher building zone utilisation with a radical rezoning programme.
You read correctly: in recent years, cantons with high population growth have been prevented from creating new building zones. Cantons with low population growth have been encouraged to eliminate existing building land.

Storm warning 3: Left and Right put vote catching above problem solving

The Left and Green Parties want to protect the landscape as well as the townscape. They want to allow as little building land as possible and still create affordable and subsidised housing.
The bourgeois politicians do not put spatial planning at the top of their agenda and point too little to the abuses of associations such as Heimatschutz and VCS, which often make building impossible with their complaints. Furthermore, they do not warn the population enough about the consequences of left-wing initiatives and do not themselves launch civic initiatives to steer spatial planning in a different direction.
Here are a few such examples, in which one part of politics acts with little foresight and the other part stands impassively on the sidelines. But no one really notices, because the media have taken time off on the issues.

Example 1: The Alternative List recently played a nasty trick on the left-wing city government in Zurich: The SBB wanted to build 375 flats in the city together with the city of Zurich. The Neugasse project even envisaged a large proportion of non-profit and subsidised flats. But the Alternative List scuttled the project with an initiative demanding that the property be bought from the SBB and turned into exclusively non-profit flats. The Alternative List's initiative was somewhat naïve, because SBB was not even considering selling the property. Consequently, the investor SBB withdrew. The result: 375 flats are now missing in the city centre. This, too, without an outcry from the population, who behave as if it did not affect them personally, when the supply-demand structure is increasingly shaken by such obstacles to construction. 

Example 2: The city of Zurich is currently buying up completely overpriced apartment buildings in the city for over 400 million francs in order to turn them into social housing. And this in the current interest rate environment, where one assumes a rather sinking value development. The ones who suffer are investors and private individuals who cannot pay these inflated house prices. Already, about 30 percent of the flats in the city are state-subsidised or in the hands of cooperatives. Unfortunately, the middle class is not benefiting from this development and is increasingly being pushed out of the city (read the article with the same title). The rich are leaving the city voluntarily, because all this also affects the already high tax burden with which one is punished for living in the city. This leaves in the city the many voters of choice of the left-green city government, thus ensuring a solid and majority voter base in Zurich for decades to come. Here too: An appropriate grumbling of the middle class, which has already had to extend its radius of living by many kilometres in all directions, is not really audible.
   
Example 3: In a Zurich agglomeration municipality, an investor planned a residential development near an open space and agricultural zone and did not demonstrate that the construction would not threaten any microorganisms on the green building land meadow. Green neighbours successfully fought the planning application because species protection was not sufficiently demonstrated.

This sour soup is not infrequently fuelled by questionable decisions and conditions imposed by judges and building authorities. For example, noise protection, which is not only a challenge for architects. Namely, when suddenly balconies can no longer be planned in the city centre. This makes large building projects impossible because the noise protection values are too low. For large cities from Rio de Janeiro to London, from Istanbul to New York and from Paris to Tokyo, densification and noise are the price of population growth, of life in a metropolis and simply the inevitable reality. Just not in "Ballenberg Switzerland", which stretches from Geneva to Kreuzlingen.

The result: the number of building permits and thus also the number of completed flats has declined significantly in recent years. Which, on closer inspection, is not surprising to anyone, because there is a lack of building land, building permits and motivated investors who want to fight against the windmills of laws, associations, neighbours and courts. Thus, the Swiss population pays a very high real estate price for the total failure of politics, questionable popular decisions and the whimsical reinterpretations of existing laws by judges acting a little too autonomously.

Storm warning 4: Buzzwords become stronger than facts

The high level of immigration is seen as a threat that needs to be averted, especially in SVP circles. The fact that this high immigration is a consequence of the good economic situation is gladly hushed up by the party. Full employment, economic growth without recessionary tendencies as in neighbouring countries, and the prosperity associated with it are directly related to immigration, which we are lucky to have. Thus, immigration creates a need for new housing, which is needed to keep Switzerland running so well.

Further demand has arisen due to the increased need for space per inhabitant: Corona and the home office as well as higher incomes and wealth have driven up demands.

In summary: We are becoming more and more. And every single person wants more and more. This combination of rising population with increased need for space will lead to almost exponential, certainly toxic growth. This is nobody's fault, any xenophobia is misguided and this development should also simply be accepted as reality. Moreover, none of this is a problem at all, because Switzerland would offer sufficient residential building land as long as it is not unnecessarily and artificially made as scarce as it is today.

The life jacket for this real estate storm: the rapid rezoning of building land

The logical consequence of too little supply and strong demand, even with rising tendencies, is sharply rising property prices and rents. The way out is obvious: significantly more building land must be zoned, and it must be zoned quickly.

For this, laws must be changed promptly and both left and right-wing politicians must work together. They must now present new initiatives to the people that will lead to affordable housing, especially in the conurbations. Because Switzerland has enough regions and areas where the townscape can be protected, where you can hear the birds chirping and where fox and hare say good night to each other.

Furthermore, the right of associations to lodge complaints must be sensibly limited and the ISOS protectors of sites should no longer be allowed to be active in densely populated areas. The people should also finally be able to vote on whether ISOS is legitimate and desirable at all.

Sailing on without a life jacket? Not a good idea

If the focus continues to be on party-political battles instead of common solutions, and if another five years of political and spatial planning failure follow, the distortions in the socio-demographic structure that are becoming apparent today will become visible. Social discord, especially in a city like Zurich where it is better not to earn too much to get a flat, will be inevitable.

Therefore: Keep an eye out for votes and elections

These developments affect everyone except a few far down or up the wealth and income statistics. If a decision at communal, cantonal or national level prevents the creation of new housing, one should take it personally and vote differently accordingly. Because you will feel the effects at some point. Either when signing the next tenancy agreement or later when you realise that you will hardly have enough money when you sell your house to afford a new flat in a more central location that is suitable for the elderly. And in elections, only candidates who propagate and promote housing for all and not just for a minority should be on the list.