Between Housing And Investments - The financialisation of housing in zurich

"Between Housing and Investments - The Financialisation of Housing in Zurich" is a master's thesis by Christian Lusti, published as part of the 4CITIES Erasmus Mundus Master in Urban Studies program. The thesis investigates the financialisation of housing in Zurich following the 2008 financial crisis, highlighting the impacts of global capital influx on the city's housing market.

The thesis argues that the financial crisis acted as a catalyst for the entry of global capital into Zurich’s real estate market, driven by factors such as low interest rates and deregulation. Institutional investors have become increasingly dominant, resulting in significant increases in land and rental prices, especially in previously affordable neighborhoods. Since 2008, real estate prices in Zurich have risen by over 300%, while residential rents for non-profit apartments increased by 40%. The average asking rent for new rentals soared by 33%, reflecting a trend that has notably displaced vulnerable populations.

The research utilizes a critical realist approach to delve into the complex mechanisms behind these changes. It critiques local and national policies that favor these trends and argues for a shift toward more socially equitable housing solutions. The influx of institutional investors has led to gentrification and a shift in ownership structures, with these entities now holding the largest share of the market.

Lusti's methodology combines qualitative and quantitative research, including semi-structured interviews and analysis of statistical data. The interviews reveal that institutional investors are increasingly involved in large-scale acquisitions and conversions of existing housing stocks into rental accommodations, contributing to the financialisation of housing and urban rent extraction.

In Zurich, approximately 92% of residents rent their homes, which is significantly higher than the national average of 61%. The research highlights that high rental rates are not just a consequence of demand but are deeply intertwined with financialisation processes that prioritize profit over affordability. The low vacancy rate of 0.07% in Zurich signifies a continuous housing shortage, exacerbating the financial pressures on lower-income households.

The dominance of institutional investors in Zurich's rental market has led to a significant shift in ownership structures. In 2023, institutional investors controlled 33.3% of rental properties, up from 25.3% in 2008. This change indicates a growing trend of commodification within the housing sector, where real estate is increasingly treated as a financial asset rather than a basic need.

Lusti's thesis not only contributes to the academic discourse on urban housing finance but also emphasizes the need for critical evaluations of housing policies. It calls for an urgent reassessment of how housing is valued and managed, advocating for solutions that prioritize social equity over profit maximization, thus aiming for a more sustainable future in urban housing markets across Europe.