Skip to main content
Swiss Journal of Economics and Statistics
Download PDF

Do Foreigners Pay Higher Rents for the Same Quality of Housing in Geneva and Zurich?

Swiss Journal of Economics and Statistics volume 144, pages 703–730 (2008)Cite this article

Summary

The Geneva and Zurich housing markets are characterised by high proportions of foreigners and a large share of rental housing. This provides ideal conditions for testing whether foreigners pay more for the same quality of housing than Swiss households and whether flats in neighbourhoods with higher proportions of foreigners rent at a discount. Hedonic price equations using a rich dataset on dwellings and their occupants yield evidence of such discrimination and prejudice. They also suggest more complex relationships between tenant nationality, housing and neighbourhood quality, and rents.

References

  • Arend, M. (1991), “Housing Segregation in Switzerland”, in E. D. Huttman (ed.), Urban Housing Segregation of Minorities in Western Europe and the United States, Duke University Press, Durham and London.

    Google Scholar 

  • Arend, M., A. Kellerhals Spitz and T. Mächler (1990), «Groupes défavorisés sur le marché du logement: Problèmes et mesures», Bulletin du logement 45, Office fédéral du logement, Bern, Switzerland.

    Google Scholar 

  • Bajari, P., and M. E. Kahn (2005), “Estimating Housing Demand with an Application to Explaining Racial Segregation in Cities”, Journal of Business and Economic Statistics, 23(1), pp. 20–33.

    Article  Google Scholar 

  • Bajari, P., and M. E. Kahn (2008), “Estimating Hedonic Models of Consumer Demand with an Application to Urban Sprawl”, in A. Baranzini, J. Ramirez, C. Schaerer and P. Thalmann (eds), Hedonic Methods in Housing Markets: Pricing Environmental Amenities and Segregation, New York, pp. 129–158.

  • Banfi, S., M. Filippini and A. Horehajova (2008), “Valuation of Environmental Goods in Profit and Non-Profit Housing Sectors: Evidence from the Rental Market in the City of Zurich”, This Volume.

  • Baranzini, A., and J. V. Ramirez (2005), “Paying for Quietness: The Impact of Noise on Geneva Rents”, Urban Studies, 42(4), pp. 633–646.

    Article  Google Scholar 

  • Baranzini, A., C. Schaerer, J. Ramirez and P. Thalmann (2006), “Feel it or Measure it. Perceived vs. Measured Noise in Hedonic Models”, Cahier de recherche HES-SO/HEG-GE/C-06/7/1-CH, Haute Ecole de Gestion, Geneva, Switzerland, available at SSRN: http://ssrn.com/abstract=937259.

  • Baranzini, A., and C. Schaerer (2007), “A Sight for Sore Eyes: Assessing the Value of View and Landscape Use on the Housing Market”, Cahier de recherche HES-SO/HEG-GE/C-07/1/1-07, Haute Ecole de Gestion, Geneva, Switzerland, available at SSRN: http://ssrn.com/abstract=981189.

    Google Scholar 

  • Baranzini, A., J. Ramirez, C. Schaerer and P. Thalmann (eds) (2008), Hedonic Methods in Housing Markets. Pricing Environmental Amenities and Segregation, New York.

  • Bayer, P., F. Ferreira and R. McMillan (2007), “A Unified Framework for Measuring Preferences for Schools and Neighbourhoods”, Journal of Political Economy, 115(4), pp. 588–638.

    Article  Google Scholar 

  • Bayer, P., and R. McMillan (2008), “Distinguishing Racial Preferences in the Housing Market: Theory and Evidence”, in A. Baranzini, J. Ramirez, C. Schaerer and P. Thalmann, op. cit., pp. 225–244.

  • Becker, G. (1957), “The Economics of Discrimination”, University of Chicago Press, Chicago.

    Google Scholar 

  • Freeman, A. M. (1993), “The Measurement of Environmental and Resource Values: Theory and Methods”, Resources for the Future, Washington, DC.

  • Galster, G. C. (1977), “A Bid-Rent Analysis of Housing Market Discrimination”, American Economic Review, 67(2), pp. 144–155.

    Google Scholar 

  • Halvorsen, R., and R. Palmquist (1980), “The Interpretation of Dummy Variables in Semilogarithmic Equations”, American Economic Review, 70(3), pp. 474–475.

    Google Scholar 

  • Harding, J., J. R. Knight and C. F. Sirmans (2003), “Estimating Bargaining Effects in Hedonic Models: Evidence from the Housing Market”, Real Estate Economics, 31: 601–622.

    Article  Google Scholar 

  • Harris, D. R. (1999), “Property Values Drop when Blacks Move In, Because …: Racial and Socioeconomic Determinants of Neighbourhood Desirability”, American Sociological Review, 64(3), pp. 461–479.

    Article  Google Scholar 

  • Harrison, M., I. Law and D. Phillips (2005), “Migrants, Minorities and Housing: Exclusion, Discrimination and Anti-Discrimination in 15 Member States of the European Union”, European Monitoring Centre on Racism and Xenophobia, Vienna, Austria.

    Google Scholar 

  • Heye, C., and H. Leuthold (2004), „Segregation und Umzüge in der Stadt und Agglomeration Zürich“, Gruppe sotomo, Geographisches Institut Universität Zürich.

  • Huissoud, T., S. Stofer, A. Cunha and M. Schuler (1999), «Structures et tendances de la différenciation dans les espaces urbains en Suisse», Rapport de recherche no 145, Institut de recherche sur l’environnement construit, EPFL, Lausanne, Switzerland.

    Google Scholar 

  • Huissoud, T., S. Stofer and A. Cunha (1999), «L’influence régionale sur la répartition spatiale des populations», in Structures et tendances de la différenciation dans les espaces urbains en Suisse, Rapport de recherche no 145, Partie II, Institut de recherche sur l’environnement construit, EPFL, Lausanne, Switzerland.

    Google Scholar 

  • Huttman, E. D. (1991), “Housing Segregation in Western Europe: An Introduction”, in E. D. Huttman, W. Blauw and J. Saltman (eds), Urban Housing Segregation of Minorities in Western Europe and the United States, Durham and London.

  • Kestens, Y., M. Thiérault and F. Des Rosiers (2004), “Links between Residential Choice Criteria and Property Values: Some Evidence Using Correspondence Analysis and Hedonic Modelling”, paper presented at 11th annual European Real Estate Society Conference, Milan, 2–5 June, Mimeo.

  • Kiel, K., and J. E. Zabel (1996), “House Price Differentials in U.S. Cities: Household and Neighborhood Racial Effects”, Journal of Housing Economics 5, pp. 143–165.

    Article  Google Scholar 

  • Kiel, K. A., and J. E. Zabel (2004), “Location, Location, Location: The 3L Approach to House Price Determination”, Discussion paper, Center of Economic Studies CES04-06, Washington DC.

    Google Scholar 

  • King, T. A., and P. Mieszkowski (1973), “Racial Discrimination, Segregation, and Price of Housing”, Journal of Political Economy, 81(3), pp. 590–606.

    Article  Google Scholar 

  • Knight, J. R. (2008), “Hedonic Modeling of the Home Selling Process”, in A. Baranzini, J. Ramirez, C. Schaerer and P. Thalmann, op. cit., pp. 39–54.

  • Malpezzi, S. (2002), “Hedonic Pricing Models: A Selective and Applied Review”, in Kenneth Gibbs K. and O’Sullivan A. (eds), Housing Economics: Essays in Honor of Duncan Maclennan, Blackwell, London.

    Google Scholar 

  • Myers, C. K. (2004), “Discrimination and Neighbourhood Effects: Understanding Racial Differentials in US Housing Prices”, Journal of Urban Economics, 56, pp. 279–302.

    Article  Google Scholar 

  • Office cantonal de la population (OCSTAT) (2005), «Portrait statistique des étrangers vivant à Genève: Résultats du recensement fédéral de la population et autres sources», Etudes et documents 37, Geneva, Switzerland.

  • Office fédéral de la statistique (OFS) (2006), «La population étrangère en Suisse», Série Statistique de la Suisse, OFS, Neuchâtel, Switzerland.

    Google Scholar 

  • Office fédéral du Logement (OFL) (2003), «Proportion de logements en propriété en comparaison internationale», http://www.bwo.admin.ch/dokumentation/00101/00105/index.html

  • Palmquist, R. B. (1999), “Hedonic Models”, in J. C. J. M. van den Bergh (ed.), Handbook of Environmental and Resource Economics, Cheltenham, pp. 765–776.

  • Rosen, S. (1974), “Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition”, Journal of Political Economy, 82, pp. 34–55.

    Article  Google Scholar 

  • Schaerer, C., A. Baranzini, J. V. Ramirez and P. Thalmann (2007), “Using the Hedonic Approach to Value Landscape Uses in an Urban Area: An Application to Geneva and Zurich”, Economie Publique—Public Economics, 20(1), pp. 147–167.

    Google Scholar 

  • Schaerer, C., and A. Baranzini (2008), “Where and How Do People Live? Segregation in Geneva and Zurich Housing Markets”, Cahier de recherche HES-SO/HEG-GE/C—08/11/1—CH, Haute Ecole de Gestion, Geneva, Switzerland

    Google Scholar 

  • Schelling, T. (1971), “Dynamic Models of Segregation”, Journal of Mathematical Sociology, 1, pp. 143–86.

    Article  Google Scholar 

  • Schuler, M. (1999), «La différenciation selon les types communaux», in Structures et tendances de la différenciation dans les espaces urbains en Suisse, Rapport de recherche no 145, Partie VII, Institut de recherche sur l’environnement construit, EPFL, Lausanne, Switzerland.

    Google Scholar 

  • Swiss Noise Abatement Ordinance (1986), SR 814.41, AS 1987 338, Bern, Switzerland.

  • Taylor, L. O. (2008), “Theoretical Foundations and Empirical Developments in Hedonic Modeling”, in A. Baranzini, J. Ramirez, C. Schaerer and P. Thalmann, op. cit., pp. 15–38.

  • Thalmann, P. (1987), «Explication empirique des loyers lausannois», Swiss Journal of Economics and Statistics, 123(1), pp. 47–69.

    Google Scholar 

  • Thalmann, P. (2003), “ ‘House Poor’ or Simply ‘Poor’?”, Journal of Housing Economics, 12(4), pp. 291–317.

    Article  Google Scholar 

  • Wanner, P. (2004), «Migration et intégration: Populations étrangères en Suisse», Office fédéral de la statistique, Neuchâtel, Switzerland.

    Google Scholar 

  • Wüest & Partner (2007), „Immo-Monitoring 2008/1: Analysen und Prognosen Fokus Wohnungsmarkt“, Zürich, Switzerland.

  • Yinger, J. (1978), “The Black-White Price Differential in Housing: Some Further Evidence”, Land Economics, 54(2), pp. 187–206.

    Article  Google Scholar 

  • Zabel, J. E. (2008), “Using Hedonic Models to Measure Racial Discrimination and Prejudice in the U.S. Housing Market”, in A. Baranzini, J. Ramirez, C. Schaerer and P. Thalmann, op. cit., pp. 177–202.

Download references

Author information

Authors and Affiliations

  1. Geneva School of Business Administration (HEG-Ge), Center for Applied Research in Management (CRAG), University of Applied Sciences of Western Switzerland (HES-SO), 7 route de Drize, CH-1227, Carouge, Geneva, Switzerland

    Andrea Baranzini, Caroline Schaerer & José V. Ramirez

  2. Research Group on the Economics and Management of the Environment (REME), Swiss Institute of Technology Lausanne (EPFL), Station 16, 1015, Lausanne, Switzerland

    Philippe Thalmann

Authors
  1. Andrea Baranzini
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Caroline Schaerer
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. José V. Ramirez
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Philippe Thalmann
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Andrea Baranzini.

Rights and permissions

Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License ( https://creativecommons.org/licenses/by/2.0 ), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Reprints and Permissions

About this article

Cite this article

Baranzini, A., Schaerer, C., Ramirez, J.V. et al. Do Foreigners Pay Higher Rents for the Same Quality of Housing in Geneva and Zurich?. Swiss J Economics Statistics 144, 703–730 (2008). https://doi.org/10.1007/BF03399272

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF03399272

JEL-Classification

  • R31
  • R52
  • D63

Keywords

  • housing market
  • rental market
  • hedonic model
  • discrimination
  • prejudice