Strong demand fueled by migration-based population growth continues to drive up home prices and asking rents in the Swiss housing market, while the subdued construction activity brings the vacancy level of existing stock to a decade low.

This extended overview from the Global Property Guide covers key aspects of Switzerland's housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents:

• Housing Market Snapshot
• Supply and Demand Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

The growth of residential property prices in Switzerland is gaining momentum. In Q3 2024, Wüest Partner's Transaction Price Index for privately owned apartments, published by the Swiss National Bank (SNB), recorded a 4.79% year-on-year increase (3.69% inflation-adjusted), significantly exceeding the 10-year average of 2.7%. On a quarterly basis, the index rose by 0.89% (1.08% inflation-adjusted).

Switzerland privately owned apartments price annual change:

Single-family houses followed a similar trend, with the Transaction Price Index increasing by 3.51% year-on-year (2.42% inflation-adjusted) and 1.62% quarter-on-quarter (1.82% inflation-adjusted). Wüest Partner anticipates further price growth in 2025, forecasting annual increases of 3.4% for privately owned apartments and 3.0% for single-family houses. This outlook aligns with UBS's latest projections, which estimate a 3-4% rise in residential property prices, driven by robust demand, easing mortgage rates, and limited new construction activity.

Data Source: Wüest Partner via SNB.

Regionally, the highest year-on-year increases in apartment prices were observed in the Bern region (6.0%), Southern Switzerland (5.6%), and Zurich region (5.2%). For single-family houses, Western Switzerland (5.3%) and Central Switzerland (5.1%) recorded the fastest growth rates.

Regional price dynamic, Wüest Partner's Transaction Price Index:

UBS's regional analysis highlights the growing challenge of affordability of homeownership in major Swiss cities. "The price-to-income ratio has shown a marked deterioration since the start of 2019 in the cities of Zurich and Lausanne in particular, as well as in Geneva," says the bank's report.

Zurich remains the most expensive city for apartment purchases, with transaction prices reaching CHF 21,050 (USD 24,460) per square meter in Q3 2024, marking a 7.7% year-on-year increase, as reported by Wüest Partner. High-end apartments in Zurich are priced at CHF 41,300 (USD 47,990) per square meter, reflecting an 11.0% annual growth rate. Geneva follows closely, with prime apartment prices exceeding those in Zurich, averaging CHF 44,300 (USD 51,476) per square meter. Nationwide, the average apartment transaction price in Q3 2024 was quoted at CHF 8,600 (USD 9,993) per square meter.

Privately owned apartment prices in the five largest cities:

Single-family house prices also reflect this trend, with Zurich and Geneva being the most expensive markets. The national average price for a single-family home as of Q3 2024 was recorded at CHF 1,200,000 (USD 1,394,392), while Zurich approaches CHF 4,200,000 (USD 4,875,725), nearly quadrupling the national average. Geneva follows with an average price of CHF 3,417,000 (USD 3,970,532).

Single-family house prices in the five largest cities:

Foreign buyers face specific restrictions when purchasing property in Switzerland. The Federal Act on the Acquisition of Immovable Property in Switzerland by Foreign Non-Residents (ANRA, also known as the Lex Koller) requires prior authorization within an annual permit quota for non-residents. Authorization rules vary by canton, and further details are available through the Federal Office of Justice (FOJ) and the Federal Land Registry and Real Estate Law Office.

Supply and Demand Highlights:

Population Growth Meets Housing Shortages

According to the Federal Statistical Office (FSO), Switzerland's housing stock comprised over 1.79 million residential buildings with a total of 4.79 million dwellings as of the end of 2023. The majority of these units (about 58%) are part of multifamily apartment buildings, while single-family homes account for around 21%. Over the past decade, the housing stock has grown steadily at an average rate of 1.3% per year.

Data Source: FSO.

Switzerland remains predominantly a country of tenants, with 58% of dwellings occupied by tenants or subtenants. Owner-occupied single-family homes represent 24% of the market, while owner-occupied apartments account for 12%, and 6% of dwellings are occupied by cooperative members or provided rent-free.

During the peak years between 2013 and 2018, the country saw the addition of over 51,000 newly built dwellings annually. However, there has been a noticeable slowdown in recent years, with the number of new dwellings declining to just over 45,300 units in 2021. Wüest Partner estimates that the number of new units delivered remained stable throughout 2023 compared to 2022, as was last reported by the FSO. Nevertheless, projections for 2024 suggest a more pessimistic scenario, with an expected 11.1% year-on-year decline in new housing developments.

This downturn is attributed to several factors, including rising construction costs, labor shortages, stringent building regulations, and lengthy approval processes, which have collectively hampered new housing developments. The Federal Office for Housing (FOH) has noted in the recent housing market overview that fewer residential units have been approved for construction with the shortfall in new development only partially mitigated by increases in extensions and conversions.

The sentiment was echoed in the Q3 2024 construction index analysis by the Swiss Contractors' Association (SBV). "Further declines [in residential construction turnover] are to be expected until mid-2025. Nevertheless, the "speed of loss" is slowing down <…> the signs point to a gentle recovery," said the SBV.

Data Sources: FSO, Wüest Partner.

At the same time, Switzerland's housing market faces growing demand due to strong population growth, driven by immigration. In 2023, the country's net population increase reached nearly 147,000 people, of which about 139,000 are attributed to net migration (including over 50,000 Ukrainians fleeing war). This population surge has intensified pressure on the housing market, contributing to Switzerland's exceptionally low vacancy rates, among the lowest in OECD countries, as highlighted in the country report by the International Monetary Fund (IMF).

From a peak of 1.7% in 2020 Switzerland's housing vacancy rate has been declining for four consecutive years, reaching 1.08% as of June 2024, down from 1.15% the previous year. This marks the lowest vacancy rate in nearly a decade, a level last seen in 2014.

Note: The number of newly constructed dwellings in 2023 and 2024 includes Wüest Partner estimates.
Data Sources: FSO, Wüest Partner.

The vacancy decline was mainly driven by rental apartments. The FSO reported a total of 40,423 unoccupied flats offered for rent in 2024. This corresponds to a year-on-year drop of 8.6% or 3,790 rental flats. The decrease in the supply of vacant rental flats, which started in 2021, thus continued, though at a slightly reduced pace compared to previous years when the number of unoccupied apartments fell by 13.5% in 2022, followed by a further 15.9% dip in 2023.

In contrast, the number of unoccupied flats for sale increased by 9.5%, or 999 units to a total of 11,551 flats, reflecting the impact of elevated mortgage interest rates since late 2021. "With the sharp increase in financing costs, home ownership has temporarily lost one of its most important purchasing arguments compared to renting. There was also great uncertainty as to whether this could result in a price setback, which caused buyers to be cautious and some owners to sell," explained Fredy Hasenmaile from Raiffeisen Switzerland.

Data Source: FSO.

The mismatch between housing supply and demand is particularly acute in major urban centers, where competition for available units remains intense. In Zurich, for example, the vacancy rate for housing has not exceeded 0.22% since 2000. Geneva also experiences significant shortages, with surrounding municipalities sometimes reporting lower vacancy rates than the city itself.

In 2024, the total rental apartment vacancy rate nationwide stood at 1.4%, while vacancy rates for owner-occupied apartments and single-family homes were 0.6% and 0.7%, respectively, as reported by Wüest Partner. Zurich's rental apartment vacancy rate was just 0.1%, underscoring the chronic housing scarcity in Switzerland's largest cities.

Housing vacancy rate in the five largest cities:

Rental Market:

Growing Demand Drives Up Asking Rents

According to the research carried out by the Global Property Guide in October 2024, gross rental yields for residential units in Switzerland averaged 3.04%, slightly down from previously reported 3.05% in February 2024 and 3.11% in August 2023. Regionally, the highest yields among the assessed submarkets were observed in the cantons of Valais (3.88%), Fribourg (3.40%), and Ticino (3.04%), while Zurich, Geneva, Bern, Vaud, and Aargau all showed yields below 3%.

The latest property market report from Wüest Partner shows even lower performance in major metropolitan centers, with prime yield for rental apartments at only 2.35% in Lausanne, 2.20% in Geneva, and 1.70% in Zurich.

Data Source: Wüest Partner via SNB.

Strong demand for rental housing fueled by limited supply in major centers and international immigration continues to drive up rental rates across Switzerland, although rental inflation has slowed down recently compared to previous quarters. In addition to asking rents, existing rents have also been growing due to two mortgage reference rate increases in 2023, which allowed upward adjustment of existing agreements.

In Q3 2024, the nationwide asking rent index published by the SNB based on Wüest Partner data increased by 3.78% year-on-year, down from 6.43% and 6.26% previously observed in Q2 and Q1, respectively. Among the major centers, the most pronounced annual growth was reported in Zurich and the surrounding region (5.46%), while in Bern and the surrounding region, the annual growth stayed below the national benchmark at 3.19%.

According to Wüest Partner reporting, the median annual asking rent for apartments in Switzerland reached CHF 230 (USD 267) per square meter of usable space in Q3 2024, up from CHF 220 (USD 256) during the same period in 2023 and CHF 190 (USD 221) in 2022. Regionally, the highest asking rents were observed in Zurich and Geneva, with median annual rents in both cities at CHF 420 (USD 488) and prime annual rents at CHF 680 (USD 790) in Geneva and CHF 860 (USD 999) in Zurich.

Apartment rents in major centers:

Industry experts anticipate the upward trajectory for rents across Switzerland to persist in the near future. At the same time, the growth rate is likely to moderate further. In their real estate market outlook for H2 2024, UBS pointed out that "given the low level of construction activity, the strong rental growth is unlikely to change in the short term."

"A likely fall in Switzerland's reference mortgage interest rate can be expected to lead to lower rents for existing rental agreements and therefore a further suppression of inflation in 2025. <…> Average asking rents can be expected to rise in all Swiss regions, although with weaker momentum than last year. For 2025, we are expecting rents to rise by 1.9% on average across the country," said Wüest Partner in their latest market report.

With more than half of the population living in rented housing and a large share of rental dwellings owned by institutional landlords rather than private individuals (over 40% nationwide, according to the FSO data), government regulation of the rental sector remains a highly relevant issue.

In April 2024, Switzerland's Federal Council opened consultations to amend current legislation regulating rental and leasehold agreements and implement targeted measures to mitigate rent increases. In addition, at the end of November 2024, two highly debated issues relating to subletting and lease termination will be decided by a popular vote. Key updates on changes in housing policies and tenancy law in Switzerland are published by the Federal Office for Housing (FOH).

Mortgage Market:

Interest Rates on Downward Trajectory, Growth in Claims Stabilizing

Responding to inflation lowering to price stability range, the SNB started lowering its policy rate in March 2024 - the first central bank among major advanced economies to do so. With three consecutive cuts of 25 bps each in March, June, and September, the rate was lowered to the current standing of 1.00%. "Inflationary pressure in Switzerland has again decreased significantly compared to the previous quarter. Among other things, this decrease reflects the appreciation of the Swiss franc over the last three months. <…> Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term," said the central bank in their latest monetary policy release.

Note: *SNB policy rate applied from June 2019, for prior periods the SNB target for the three-month Swiss franc Libor is displayed.
Data Source: SNB.

The overall ease in inflation and corresponding monetary policy shift reflected in published interest rates on new mortgages, which decreased year-on-year for all categories of loans, according to the SNB data. As of September 2024, the average interest on fixed-rate mortgages of all maturities dropped below the comparable 2023 and 2022 levels and reached 1.91% for 10-year loans and 2.14% for 15-year loans. At the same time, variable mortgage rates and rates linked to SARON (average overnight interest rate on the secured money market) decreased only marginally compared to September 2023 and are still above the September 2022 level.

The mortgage reference rate published by the Federal Office for Housing based on average interest on existing loans and used to determine rent adjustments has remained unchanged at 1.75% since December 2023.

Published interest rates on new mortgage loans:

However, the improvement of the macroeconomic landscape and decrease in interest rates are yet to be fully reflected in the dynamic of the mortgage claims volume, however. "Momentum on the mortgage and real estate markets in recent quarters has been weaker than in previous years. While the vulnerabilities in these markets have receded slightly, they still exist," said the SNB in their Q3 2024 quarterly bulletin.

According to the central bank's data, 20,596 new mortgage loans amounting to CHF 19.1 billion (USD 21.2 billion) were advanced in Q2 2024, up by 9% from the previous quarter. This volume, however, is still 4.9% below the comparable period of 2023 and 7.6% below the comparable period of 2022. On an annual basis, the total amount of new mortgage loans dropped by 3.6% in 2023 and 3.5% in 2022.

Of the newly originated in Q2 2024 mortgages the largest share was represented by owner-occupied residential properties of households (46.6%), the remaining amount split between rental properties of households, rental properties of companies, and other types of mortgages.

Data Source: SNB.

The total value of mortgage claims held by banks in Switzerland continues to grow, albeit at a slower pace. In 2023, it increased by 2.3%, compared to 3.7% in 2022 and 3.4% in 2021. In the first eight months of 2024, the year-on-year expansion remained around 2.3%-2.4%, bringing the mortgage stock to CHF 1.2 trillion (USD 1.4 trillion) in August 2024. "Following a prolonged slowdown, growth in banks' mortgage claims, which make up roughly 85% of all bank lending to domestic customers, stabilized this year <…>. The stabilization is attributable to mortgage lending to households and to private companies alike," commented the SNB.

Sized against the Swiss economy, the mortgage market moderated from the pandemic-related 156.1% spike in 2020 to 148.4% of GDP in current prices in 2023 but continues to trend upwards long-term, compared to about 136% of GDP a decade ago and about 118% of GDP two decades ago.

Data Sources: SNB, FSO.

Socio-Economic Context:

Inflation Within Price Stability Range, Growth Recovering Gradually

Weak external demand and tighter financial conditions slowed the expansion of the Swiss economy from 3.1% in 2022 to 0.7% in 2023. More recently, the real GDP growth has been recovering gradually and is projected by the IMF to reach 1.3% in 2024. A similar assessment was made by the SNB in their latest quarterly bulletin: "Economic growth in Switzerland was solid in the second quarter of 2024. Activity is likely to remain rather modest for the time being. The SNB anticipates GDP growth of around 1% for this year. Economic development should gradually improve thereafter. The SNB expects growth of around 1.5% for 2025."

The monetary policy of the country's central bank, along with global disinflation, has successfully brought headline inflation down from 2.8% in 2022 to 2.1% in 2023 and within the 0-2 percent price stability range in 2024. Consumer price index (CPI) inflation was most recently reported by the FSO at 0.6% in October 2024 and is projected by the IMF to stay within the price stability range in 2024 (1.3%) and beyond.

Data Source: IMF.

Immigration remains a key factor for Switzerland's economy. According to the data published by the FSO, net migration to the country has been persistently positive in the last 26 years, contributing to the labor force growth and helping to counter the declines in the domestic population.

The FSO reporting shows that between 1983 and 2023 the foreign population (including stateless persons and other non-Swiss categories) permanently residing in Switzerland grew from about 946 thousand to 2.4 million, its share in the total population increasing from 14.7% to 27.0%. In 2023, the largest group of international immigrants arrived from Ukraine (over 51,000), followed by Germany (over 26,000), France (over 19,000), Italy (over 19,000), and Portugal (over 12,000).

In the first 10 months of 2024, the State Secretariat for Migration (SEM) reported net foreign migration of permanent residents at 71,972, down from 82,999 during the comparable period last year, but above 63,877 in 2022.

"A strong labor market and high wages have helped attract and absorb skilled workers from abroad. <…> However, the unemployment rate of workers with a migration background has been persistently higher, and immigrants work disproportionately in non-management jobs, with an average income lower than Swiss nationals. Active policies to attract, retain, and integrate migrants into the labor force could, therefore, contribute to addressing labor shortages and skills mismatches, particularly in the medium-term," noted the recent IMF Selected Issues report on Switzerland.

Data Source: FSO.

Overall, the Swiss labor market remains resilient, although unemployment is slowly rising from the historic lows observed in the last two years. According to the figures reported by the State Secretariat for Economic Affairs (SECO), in October 2024, nationwide unemployment reached 2.5%, up from 2.0% and 1.9% during the same period in 2023 and 2022, respectively.

"Developments in the labor market lost momentum in recent months. Growth in employment slowed somewhat and unemployment continued to rise," noted the SNB in their recent analysis. "According to [the national job statistics], many companies continued to have trouble finding suitable personnel. However, the recruitment difficulties decreased again slightly in the second quarter."

The IMF staff country report sees labor shortages and skill gaps among medium-term challenges affecting the development of the Swiss economy.

Data Sources: SECO via FSO.

In general, the Swiss economy has demonstrated resilience in the face of recent challenges. Its diversity, along with prudent government policies, contributed to a swift recovery from the pandemic.

In October 2024, Fitch Ratings affirmed the country's 'AAA' standing with a stable outlook, citing its strong credit fundamentals, low debt levels, and stable public finances.

The economy, however, continues to experience headwinds from a number of internal and external factors, including demographic trends, skills gaps, regional conflicts, and lower trading partner growth. The ongoing state-facilitated integration of Credit Suisse and UBS (after the former's collapse in 2023) and the large size of the combined bank presents a potential risk to the country's macro-financial stability. "The [2023 Credit Suisse] crisis has not translated into systemic financial stress, but strong reforms are needed to guarantee financial stability and preserve Switzerland's reputation as a leading financial center," said the IMF staff report.

Sources:

1. Swiss National Bank (SNB)
   1. SNB Data Portal: https://data.snb.ch/
   2. Foreign Exchange Rates - Month: https://data.snb.ch/
   3. Monetary Policy Assessment of 26 September 2024: https://www.snb.ch/
   4. Quarterly Bulletin 3/2024: https://www.snb.ch/
   5. Real Estate Price Indices: https://data.snb.ch/
2. Federal Statistical Office (FSO)
   1. Gross Domestic Product: https://www.bfs.admin.ch/
   2. Consumer Prices: https://www.bfs.admin.ch/
   3. Population Statistics: https://www.bfs.admin.ch/
   4. Components of Population Change: https://www.bfs.admin.ch/
   5. International Migration: https://www.bfs.admin.ch/
   6. Foreign Permanent Resident Population Change: https://www.bfs.admin.ch/
   7. Situation on the Labor Market in October 2024 (FR): https://www.bfs.admin.ch/
   8. Dwellings Statistics: https://www.bfs.admin.ch/
   9. Empty Dwellings Census: https://www.bfs.admin.ch/
   10. Rented Dwellings: https://www.bfs.admin.ch/
   11. Tenants/Owners: https://www.bfs.admin.ch/
3. Federal Office for Housing (FOH)
   1. Reference Interest Rate (FR): https://www.bwo.admin.ch/
   2. Tenancy Law (FR): https://www.bwo.admin.ch/
   3. Housing policy (FR): https://www.bwo.admin.ch/
   4. Housing Market Overview (FR): https://www.bwo.admin.ch/
   5. Targeted Measures to Mitigate Rent Increases (FR): https://www.bwo.admin.ch/
4. State Secretariat for Migration (SEM)
   1. Foreigners Statistics (FR): https://www.sem.admin.ch/
5. Federal Office of Justice (FOJ)
   1. Acquisition of Property by Foreign Non-Residents: https://www.bj.admin.ch/
6. Publication Platform for Federal Law (Fedlex)
   1. Federal Act on the Acquisition of Immovable Property in Switzerland by Foreign Non-Residents: https://www.fedlex.admin.ch/
7. Swiss Contractors' Association (SBV)
   1. Construction Index (FR): https://www.bj.admin.ch/
8. International Monetary Fund (IMF)
   1. Country Overview: Switzerland: https://www.imf.org/
   2. IMF Staff Country Report: https://www.imf.org/
   3. Switzerland: Selected Issues: https://www.imf.org/
9. Organization for Economic Co-operation and Development (OECD)
   1. OECD Economic Surveys: Switzerland 2024: https://www.oecd.org/
10. Wüest Partner
    1. Property Market Switzerland 2024 | 4: https://www.wuestpartner.com/
    2. Property Market Switzerland 2023 | 4: https://www.wuestpartner.com/
11. UBS
    1. Real Estate Outlook - Switzerland, Edition 2H24: https://www.ubs.com/
    2. UBS Real Estate Market Study: Price Developments on the Real Estate Market: https://www.ubs.com/
    3. UBS Swiss Real Estate Bubble Index 2Q. 2024: https://www.ubs.com/
12. Raiffeisen Switzerland
    1. Home Ownership, the Better Share? (DE): https://www.raiffeisen.ch/
13. Fitch Ratings
    1. Fitch Affirms Switzerland at 'AAA'; Outlook Stable: https://www.fitchratings.com/