Laws, not expats, creating Geneva housing bubble: study

Wed Aug 29, 2012 11:25am EDT
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By Tom Miles

GENEVA (Reuters) - Geneva's housing market is overheating because of inflexible laws, not because of the expatriate white-collar workers who are popularly blamed for crowding the staid Swiss city, a study by Avenir Suisse, according to an economic thinktank.

"Demand cannot explain the soaring prices in Geneva. It's about supply," Marco Salvi, author of the study entitled "A home-made shortage", told a press conference.

Rents have risen far faster than elsewhere in Switzerland in the last decade, and spiraling demand is often cited as the reason for the imbalance in the market.

The common assumption is that the town's housing market cannot keep up with the latest influx of wealthy foreigners, many of whom work in commodity trading, banking or multinationals such as Proctor and Gamble, and have big budgets and grand ambitions about where they want to live.

Squeezed between the southern tip of Lake Geneva and the French border, Geneva has never been awash with vacant properties, especially around the lake. But there is plenty of potential for new housing supply on the outskirts, Salvi said.

However, unlike its rival Zurich, Geneva is not building.

"Why? It's the laws. What's the main difference? It's the concept of a development zone," Salvi said.

The development zone covers a third of the available residential building zones of the canton of Geneva and 60 percent of the urban and suburban zones.   Continued...