New study emphasises the importance of new replacement construction for relieving housing pressure
On average, four new flats are created for every flat that is demolished. These are the findings of a study by Raiffeisen Switzerland. According to the study, there is often no alternative to replacement construction to combat the housing shortage, despite criticism.
“Unloved but necessary replacement new builds” is the title of Raiffeisen Switzerland ‘s study “Real Estate Switzerland – 2Q 2025“. According to the study, replacement new builds create an average of four new flats for every demolished flat. “Despite criticism, there is often no alternative to replacement construction in order to combat the housing shortage without further urban sprawl, as gentler forms of densification, such as conversions and extensions, are not sufficient to maximise the use of scarce building land,” Raiffeisen Switzerland’s Chief Economist Fredy Hasenmaile is quoted as saying in a press release issued by the banking group on the study. He recommends paying “greater attention to social and ecological compatibility” in order to maintain social acceptance of new replacement construction.
According to the authors of the study, the situation on the rental housing market remains characterised by excess demand. Falling interest rates could boost construction activity, according to the press release. “However, it is questionable whether the high construction levels of the past can be achieved again even under negative interest rates, as regulatory hurdles and the very limited availability of building land continue to dampen the potential,” says Hasenmaile.
The study identifies an increase in demand on the owner-occupied property market as a result of falling interest rates. The banking group’s experts have also observed a rising demand for office space. This is due to employment growth and an increased office presence. “After several years of rather mixed prospects, the outlook for office properties has recently brightened noticeably,” says Hasenmaile.