Construction activity is declining
The number of planning applications is currently well below the value of 2018. This is shown in the current real estate barometer of Zürcher Kantonalbank. According to the analysts, the decrease is related to high vacancy rates. Nevertheless, there is excess demand in urban centers.
According to the real estate barometer of Zürcher Kantonalbank ( ZKB ) for the second quarter of 2021, the number of projected apartments in planning applications has decreased by 23 percent compared to 2018. According to the ZKB analysts, this is related to high vacancy rates in peripheral regions, to which investors would have reacted accordingly. In urban centers with low vacancy rates, construction activity is picking up again in some cases, according to the barometer.
Lausanne and Zurich are cited as examples. In the cantons of Geneva and Basel-Stadt, however, the analysts have observed a decline in construction activity. They attribute this to the high regulatory hurdles typical of urban areas and the scarcity of building land. Overall, however, the analysts state that “new apartments are increasingly being planned where the demand for living space is high”.
In the canton of Zurich, the desire for one's own four walls, which has been intensified by the pandemic, is further explained in the barometer. According to him, house prices have increased by 5.5 percent over the previous year and 2.9 percent over the previous quarter. At the same time, the analysts see a shrinking of the offers advertised on real estate portals. They explain this with the fact that many properties are marketed by regional brokers or are already sold before construction begins. For this year and the following, the analysts are assuming excess demand in the residential property market across Switzerland.