Housing Market in Lausanne

The market of short term and long-term housing in Lausanne is not well organized; this is mainly because the number of foreign students in Lausanne is growing as do the city. There are different websites that offer places but without efficiency and rental prices are growing up. What we propose in this project is to organize the market of housing by joining lenders and tenants in organized public auctions. We settle groups for participants in order to make fair auctions. Problems in the current market Below, we specify some renting problems that exist now in the market and the way they can be solved with our auction. One of the major problem is that people ask for preferences (the owners mainly prefer girls, French speakers, also some specific nationalities). Organizing an auction offers equal opportunities to everyone. The web-sites that distribute the existing offers in the market are mainly written in French, so the site would provide offers that have to be written in two languages (English, French). For instance, the standard options of the apartments will be written in these languages (the optional part of the description will be written at the preference of the lender/seller). Agencies ask for fees from tenants/lenders, sometimes before the agreement is made (between tenant and lender for example). Our solution will not ask for such fees, although a fee will be paid after the agreement will be made. As an initial stage we think that this fee could be erased in the first stage of the implementation of the project, in order to have more participants. Another problem is that sites are not updated frequently and may contain old information that is not available anymore. After the auction, if the apartment is not longer vacant, the apartment disappears from the offers database (the information will be consistent and the server will not be filled with inaccurate information) and the tenants application for a house is deactivated. On the existing sites, each lender asks for different documents and requirements. This is not flexible and is time consuming, as the tenant should prepare different applications for each room. A standardized format where a fixed number of documents/requirements are asked for both the tenant (ID, e-mail, etc) and the lender (standardized pictures, description) would make the application faster and fairer. In the description of the apartments there is an option to put additional information about the property (for instance, information about neighbors and services, stores, hospitals, etc) The government does not have control of the housing and the law protects more the lenders than the tenants. By having the support of the government we make people trust our project and use our site. If the project is just implemented for students accommodation, the support of the University (EPFL, UNIL) could be enough. Some people have an access to private information about availability of the apartments and sometimes the tenant selection process is not public, in this case the auction makes everyone equally informed. Another advantage of the auction is that it states true prices for the apartments with such differences as view from the window, the amount of sun entering the house, the location relative to WC, the dimension of the kitchen etc. For instance, FMEL offer fixed price for all rooms, but someone

can afford paying a little more to have such opportunity and the auction give a chance to adjust prices for these conditions. The auction sets reasonable price for an item if there are many participants (if there are few people they can negotiate previously to make an agreement about the price). Hence, we run the auction every two weeks (and more frequently on August and September) in order to provide fair process of establishing the price. One person has the possibility of participating to at most 5 auctions, because otherwise she will not take it seriously. In this way, she will apply only for the specific apartments she is interested in.

Facts about Lausanne We present some statistics of the mobility and houses in Lausanne (All numbers are taken from the official government sites1, apart from the points where it is additionally specified). The number of residents in Lausanne at the end of June 2011 were 135 432 2. The change of population during 2000-2010 was 10.5%, from which 9.1% through migration. Concerning the housing, the number of residents per room is 0.6. There were built 2.9 new housing units per 1000 residents (in 2010). The number of available flats in canton Vaud in 2011 was 11,093 which represent 32,393 rooms, to see the details see table1 in the appendix. Therefore, the total number of free rooms available in Vaud is 32,109. The statistics of dwellings in Lausanne during 2000 was: Total 69,993 61,660 6,840 1,487 #rooms 199,261 179,115 16,661 3,479

Total number of dwellings Permanently occupied Lived temporarily (HT) Unoccupied

For more details Table 2 in Appendix

From these dwellings 57,031 were rented and the mean per meter squared was 14.18 francs.

http://www.bfs.admin.ch/bfs/portal/en/index/regionen/regionalportraets/waadt/blank/key.html http://www.pxweb.bfs.admin.ch/Dialog/Saveshow.asp Source des donnes : Ville de Lausanne - Contrle des habitants http://www.scris-lausanne.vd.ch/Default.aspx?DomId=1612

The number of non-furnished empty flats in Lausanne behaves during the last 10 years as in the next figure:
0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30%

0.20% 0.10% 0.00% 1998 2000 2002 2004 2006 2008 2010 2012

Table 3 of Appendix to see the details

From the figure above we can observe the lack of empty places in Lausanne. During 2011 there were around 78 empty dwellings and the percentage of vacant housing in 2011 was 0.12%. The following figure shows that the non-permanent population is mainly represented by young people between 16-35 years old.

The percentage of change in population during last year was 1.48% in average, meaning 10,557 people (given a total number of 713,281 of people living in canton Vaud). The immigration has been growing through the last years, mainly foreigners arrived and Suisse people departed (Table 4). In addition, we notice that the 82% arrived during September and October. Considering the new arrivals and the available housing in Lausanne we consider that the market is not complete and people with a dwelling have to be m

Statistics of Students There are two large Universities in Lausanne, EPFL and UNIL, but also there are many private schools such as Business School Lausanne and cole htelire de Lausanne. In the Table below we summarize the School

number of students and percentage of foreign students. In UNIL we group the students of joint programs with other institution like the programs of HEC (Faculte des Hautes tudes commerciales). 3 Master 6,325 9620 100 186 PhD 2,117 1806 50 86 Foreign Students 36% 18% 74% 60%

EPFL UNIL BSL EHL

EPFL received 2,356 new bachelor & master students in 2011 from which 52% were foreigners and 495 PhD students from which 79% were foreigners. In the case of UNIL they received 3279 new students during last year. The number of foreign students in EPFL has been growing as we show in the next graph:
3,000 2,500 2,000

Bachelor & master

1,500 1,000 PhD Total Foreign students Enrolled students

500 0 1998

2000

2002

2004

2006

2008

2010

2012

Table 5 in Appendix to see the details.

Current market There are many websites and estate agencies in Lausanne, we analyzed a survey of them to settle the current market and to find which problems could be solved. a) FMEL (Fondation Maisons pour Etudiants) The website is in English and French, although some descriptions are just in French. They present multiple options of rooms, contracts, leases and fees. As a student you can register and apply for a room. The description of the rooms are not standardized, they dont show basic characteristics of place such as surface in m2 neither pictures of rooms, studios or flats. The selection of the people who gets a place is not public. There are places that are available and there are not published. b) www.unil-epfl-logement.ch The website of EPFL and UNIL offer rooms and studios which belong to private lenders. Each lender fills a standard form and optionally they can add more descriptions and pictures.

http://www.unil.ch Key Statistiques EPFL, Key statistiques

The tenant can choose between flats and dependent rooms and order his preferences by price, location, number of rooms. The main problem is that the offers of flats and rooms are not update, so people who look for a room waste time e-mailing and lenders with old announcements would receive a bunch of mails for a room that is not available. The web-site does not present the offers in a standardize format and you cannot make parallel comparisons between rooms. Almost all the offers are in French and the website does not offer other option of language. c) Comparis.ch gathers all the advertisements of the 17 largest Swiss property market places at a glance. You have the option to buy/rent a house, specify the town, the limits of the price, the type of accommodation and the number of rooms in the flat, the starting data of availability, the living area and some standard (balcony, terrace, fireplace, dishwasher, washing machine, lift, parking place, pets allowed, suitable for wheelchair) and optional requirements (lake view). They manage around 53500 advertisements, from which in Lausanne there are 1050. Publication date, price, move-in date, comparis points and other options can sort the results. Advantage: 1. The option of requesting by mail a price alarm when the price of the flat has changed. 2. The option to add to favorites the room you searched for, from the description of the rooms page. 3. Standard description: available date, address, rent requested, size of the apartment. 4. Optional description: additional details. 5. Information about how much do the neighbors pay and for what type of flat. 6. The option to compare private liability insurance and a tax calculator. 7. Info in English. 8. Provide the data at which the announce is published Disadvantages: 1. Does not provide pictures mandatorily. 2. Optional description in French. 3. The data basis is taken from different sites, so it may be not consistent because of possible duplicates.

Design Participants: The main feature of the project is that we will joint lenders and tenants into an organized market. Both parts have to register into the database. The form of tenants includes Name, Surname, email, telephone, address, etc. In addition, tenants have to provide a proof of income (salary, salary of their parents or scholarship attestation), contact information of a person who will support the tenant in case of any difficulty; in the case of students, they have to provide their enrollment certificate. Students have to sing in, with their gaspar account for EPFL and similar for other schools, before the auction. The lenders form, includes contact information, general information about the place for rent (standard format that will be showed in different languages). Detailed pictures of the place (room(s), corridor(s), WC, kitchen, street view). The lender can include comments or additional information of the place. We consider FMEL as a participant in our market, given that the prices of FMEL are competitive for students, the private lender have to compete in prize and quality. In the case of FMEL places, we are planning to establish a fixed term of 1 year for each, to maintain the liquidity of the market.

Market dynamics We identify four groups of people for the auction, bachelor and master students, PhD and nonstudents. The purpose of our solution is that prices of the flats sold in the auction should be fair (pay similar price for similar quality, number of rooms and type of contract). We set a centralized system where lenders are going to propose offers and tenants search for a room. A sealed-bid second price auction is going to be organized, such that: in one auction enter flats with similar features, such as number of rooms, but also similar qualities like surface, number of bathrooms, furnished/not furnished, balcony, terrace, parking place, etc. We are going to give points for each characteristic and so we put in the same auction flats with similar number of points (that we consider should have similar prices). In each auction, there will be several markets, each for one specific lender. As an example, two lenders, John and Marta have two, respectively one flat with two rooms and similar features. Therefore, we put them in the same auction. We will have two markets, one for the two flats of John and one for the single flat of Marta, in which tenants will enter and bid. The auction is second price, so tenants will bid with their estimate of the price for the flat and at the end, the person that have bid the highest price will receive the flat at the second price offered (second after the highest). The tenants have the possibility to enter an auction as a group. We provide a forum, where they can discuss and meet each other in order to apply for a flat for the entire group. They are going to bid as one single tenant. The lenders have the possibility to ask for a guarantee from the tenant, that the tenant should pay in one-week term. This is a proof of seriousness that we and moreover, the lenders, request from the tenants. If the guarantee is not paid, the lenders accommodation will enter in the auction the next week (or the following auction organized). After the tenants depart, we ask for a feedback of the room they have rented, in order to give a fair renting of that house (not only the appreciation of the lender himself). Although it is the most used, we think that the English auction is not proper for our case, given that the bidders will pay more and more to receive the house, the prices will not converge to the fair ones. Our purpose is to solve the allocation of houses problem, but also drag down the prices to the fair ones, as now they are speculated.4 The auctions are organized from two to two weeks, and possible, during August and September, more often, one week, as the demand for houses grows in that period. We chose this period, because if they would be more often, would not gather enough tenants and also enough lenders. We need more tenants to compete and to offer a good and fair price that will satisfy the lender. We need also many lenders, in order to compete between them and to offer a satisfying low price enough for the tenants. One tenant can participate in maximum five auctions at one date, because otherwise he will not take it seriously. He can enter an auction and forget about it, or bid unserious high prices on flats where lenders do not ask for a guarantee, just to make a joke. By organizing an auction, the preferences problem that exists now will be solved, given that all the people will be treated equally. In addition, they are going to be equally informed, by sending them an e-mail,

Swiss Federal Statistical Office-Rental prices, 2003

one week before the auction they are going to enter. The tenants will receive also information about similar houses as their favorites if they want. The system updates the information fast, in the sense that after we match one flat of a lender with one tenant, both will remain in the system, but the information will be deactivated, until the flat become free again and, respectively, the tenant is looking for a new accommodation. The system is designed in four languages: French, German, Italian, and English, so that both Swiss people and the foreigners have equal opportunities to find the room they prefer. This feature is realized for standard information. Additional information is written in preferable language (for example, if a French speaker lender wants to rent his house to a French speaker, he will give optional details about the apartment in French). Our solution will need to be promoted in order to gain confidence, so we are going to ask for the support of the government or EPFL/UNIL. We will gain first the students. Then, we estimate that the tenants will move to our market, given that the prices will be lower. The lenders will have to move also to our market, given that the demand will not exist anymore in their market. Example of implementation. We have 200 flats, 20 with 1 room, 10 with 2 rooms, 10 with 3 rooms and 15 with 4 rooms. We provide a score to each flat, considering its characteristics and the lenders selects in a group of prices according to the minimum rent they can accept. Then from the 1 room flats received a score between 1-10 and range of prices 500-700, 10 of them between we fixed the range 700-900. We make one auction for the 1 room flats with range 500-700. In this auction we have ten markets, each of them for each flat. For all the others, we apply the same algorithm (we put in different auction flats with different number of rooms and different qualities). The idea is that the estimated prices of all the flats that enter in one auction to be the same. The table below shows the implementation:

Auction number Auction 1 Auction 2 Auction 3 Auction 4 Auction 5 Auction 6 Auction 7 Auction 8 Auction 9

Number of flats in the auction and description of them (number rooms + score) 10 flats - 1 room 1-5 10 flats - 1 room 1-10 5 flats - 2 rooms 1-5 5 flats - 2 rooms 5-10 5 flats - 3 rooms 1-10 5 flats - 3 rooms 5-10 5 flats - 4 rooms 1-10 5 flats - 4 rooms 1-10 5 flats - 4 rooms 1-10

Estimated Price 500-700 CHF 700-900 CHF 800-1000 CHF 1000-1100 CHF 1100-1300 CHF 1300-1500 CHF 1400-1600 CHF 1600-1800 CHF 1800-2000 CHF

Advantages. The prices will be fair. The sealed-bid second price auction offers the tenants the possibility to bid the price they can afford to pay. Prices will not grow up, like they would do if the tenants would start competing between each other. Also, a fair price is also given by choosing the second highest price to be paid. Moreover, given that FMEL houses will also enter the auction and people have a good estimation of how much they value, the competitors will have to set their limit of prices accordingly (the lender chooses the minimum price). The auction offers equal opportunities to each tenant, so the preferences problem is solved.

People can find faster a place to stay, given that they can bid individually and also join a group to bid together for an apartment. The lenders will be happy entering our auction. Many tenants will enter the auction (we establish auctions from two to two weeks and also we assume we will reach many people in our market), so the prices offered will be very diverse, such that the second highest will be very probable a pretty high one, that will satisfy the lender. The tenants will be happy entering our auction. Many lenders will compete, so they will offer enough low prices to satisfy the tenant.

Drawbacks. The lender cannot specify the price that he would prefer for his house. However, this is solved by establishing minimum prices that tenants can bid for the room (also maximum prices are set). The lender cannot be sure that the person who won the auction is trustable for his room. We can solve this problem by establishing apartment visits with the presence of both tenants and lenders in order to offer the possibility for the lenders to know the possible tenants and also, to give their approval for each tenant. If they do not want, they may ask us to forbid one person to enter in the auction. However, the reason should be very good and fair, because we want to offer equal opportunities to everybody (so for example, preference for nationality/gender cannot be considered by us as a fair reason).

Appendix Table1.
Nb. of rooms in a flat 1 2 3 4 5 6 7 8 9 10+ Number of flats 2153 2853 2986 1643 761 341 148 99 49 60 Number of all rooms in all flats 2153 5710 8967 6588 3830 2082 1085 856 522 600

Table 2
Total number of residential units Permanently occupied Lived temporarily (HT) Unoccupied Total 69,993 61,660 6,840 1,487 1 piece 2 piece 3 piece 4 piece 5 piece 6 piece + Total rooms 1r 2r 3r 4r 5r 6r+ 10,025 19,139 22,474 10,943 4,708 2,704 199,261 10,025 38,278 67,422 43,772 23,540 16,224 7,523 16,814 20,515 10,056 4,317 2,435 179,115 7,523 33,628 61,545 40,224 21,585 14,610 2,018 1,882 1,653 739 324 224 16,661 2,018 3,764 4,959 2,956 1,620 1,344 478 443 306 148 67 45 3,479 478 886 918 592 335 270

Table 3
Total Logements de 1 pice Logements de 2 pices Logements de 3 pices Logements de 4 pices Logements de 5 pices Logements de 6+

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

534 279 80 151 161 165 169 227 41 75 121 78

222 131 27 42 51 32 55 73 13 16 31 28

147 84 23 31 19 41 27 54 13 23 28 13

130 43 18 41 41 50 43 45 5 22 28 22

24 14 8 19 27 28 25 38 5 6 21 12

9 6 3 13 18 10 13 13 3 6 7 0

2 1 1 5 5 4 6 4 2 2 6 3

Table 4
Mouvements migratoires(1) selon l'origine et le sexe, commune de Lausanne, 2000-2010
Suisses Total Etrangers Total Total Total

Hommes

Femmes

Hommes

Femmes

Hommes

Femmes

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

145 166 309 424 428 417 387 261 265 157 180

297 182 440 591 565 518 417 289 193 324 273

-1 -

442 348 749 015 993 935 804 550 458 481 453

117 499 716 810 646 310 418 604 1 649 1 745 474

383 383 787 764 642 368 502 701 1 450 1 752 627

1 1 1

1 3 3 1

500 882 503 574 288 678 920 305 099 497 101

- 28 333 407 386 218 - 107 31 343 1 384 1 588 294

86 201 347 173 77 - 150 85 412 1 257 1 428 354

58 534 754 559 295 - 257 116 755 2 641 3 016 648