"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 spiralling 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 (PG.N), 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.

It is covered by local and national laws stipulating the precise use, location and type of buildings; the price of land; quotas of social housing and rents and yields that are fixed for a decade.

"FROZEN TOWN"

"We have a frozen town," said Salvi.

When 48 villas were put on the market, they were snapped up within 48 hours, according to Xavier Comtesse, the head of Avenir Suisse in the French-speaking part of Switzerland.

"They sold like tickets for a Madonna concert," he said.

As well as a lack of new buildings, a law dating from 1983, intended to stop landlords converting residential properties into office space or doing luxury conversions, effectively limits rents to 18 percent of the median income level and prevents rent hikes within three-to-five years of renovation work.

Unable to pass building costs to their tenants, landlords are dissuaded from doing work on their properties. The last census, in 2000, found that 83.5 percent of properties that were over 40 years old had not been renovated.

Other landlords get around the law by renovating in phases. But the need for such tricks puts off institutional investors who might develop the market, despite ultra-low interest rates.

The Swiss National Bank said on Monday that it will not for now seek to force banks to boost their capital buffers to safeguard against mortgage risks as the country's property market seems to be cooling.

The Avenir Suisse study recommended freeing up prices and taxing the proceeds, abolishing the most onerous laws, building on some of Geneva's agricultural land and building upwards.

But tenants are not pushing for change. One 2011 study found that 54 percent of households were satisfied with their home, putting rent third on their list of complaints, after noise disturbance and the size of the dwelling.

Salvi said Geneva was a tale of two rents: while the value of new rental contracts was growing rapidly, most Genevans were enjoying low rents that hadn't changed for years.

In real terms, old rents rose only 11 percent between 2001 and 2011, slightly above the rise of 9 percent in the whole of Switzerland. People on old contracts were now paying 30 percent less than new rents, Salvi said.

"Whoever moves loses," he said. (Reporting by Tom Miles; Editing by Jon Loades-Carter)

• A Permanent Economic Emergency