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Property prices in Switzerland set to become (slightly) more affordable

Home ownership in Switzerland is out of reach for most people, but there are changes afoot — at least in some regions - that could make it possible for more people to buy.

Published: 11 June 2024 12:51 CEST
Property prices in Switzerland set to become (slightly) more affordable
Owning is set to become cheaper than renting. Image by Dimitris Vetsikas from Pixabay

At times, being a property owner in Switzerland is cheaper than renting, and at other times it is the opposite.

For instance, if mortgage interest rates are low and rents high, then buying a home makes better financial sense than being a tenant.

What is the current situation?

In the first three months of 2024, home owners have had a heavier financial burden than tenants of similar properties, according to a UBS study.

It shows that the annual cost for an owned apartment of four and a half rooms and 110 square metres of living space was 32,500 francs a year between January and end of March, while the annual rent for for a similar size flat amounted to 30,500 francs.

That is especially the case for owners who took out a long-term fixed mortgage when rates were at their highest, that is, well over 2 percent. 

For instance, a person who took out a long-term mortgage during this period would have to bear cumulative additional costs of almost 50,000 francs by 2033.

What lies ahead in terms of property prices?

Better news for prospective property owners.

Thanks to falling mortgage interest rates — due mostly to two key rate cuts still expected from the Swiss National Bank (SNB) — mortgages are now significantly lower than they were at this time in 2023.

Many are now below 2 percent and they are expected to drop further by the beginning of 2025, according to UBS’s forecast.

This is already the case in cantons of Bern, Solothurn, Aargau, Schaffhausen and Thurgau, as well as in certain areas of Vaud, Fribourg and Valais, where buying a home is also already cheaper than renting.

On the other hand, mountain regions will continue to be more expensive than most other parts of the country.

READ ALSO: Why luxury Swiss mountain resorts are becoming ‘lifeless’ 

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PROPERTY

Where in Switzerland are most second homes located?

Whether mountain homes or other types of residences, some areas of Switzerland have more ‘holiday’ dwellings than others. Where is the highest number found?

Published: 3 May 2024 14:41 CEST
Where in Switzerland are most second homes located?

Many people associate the term ‘second home’ with chalets in the Swiss Alps.

And while many people do own properties there, which they use on weekends or during holidays, official data shows that many of these accommodations are located elsewhere as well.

This information comes from the Swiss Office for Spatial Development (ARE), which keeps track of the second-home situation throughout Switzerland.

But first: What are the rules on owning a second home?

Since Switzerland is a small country with a limited supply of land, the constructions priority is given to main residences, especially considering the acute housing shortage in many parts of the country.

For that reason, second homes can’t exceed 20 percent of any community’s overall housing stock.

Right now, “it is impossible to build second homes in 340 municipalities,” which had already reached this threshold, according to ARE. 

What are these areas?

At the end of 2023, these eight communities were added to the list of municipalities where construction of new second dwellings is no longer allowed:

  • Leissigen (BE)
  • Lauwil (BL)
  • Jussy (GE)
  • Pregny-Chambésy (GE)
  • Movelier (JU)
  • La Côte-aux-Fées (NE)
  • Démoret (VD)
  • Le Lieu (VD)

Where are most second homes located in Switzerland?

They are primarily concentrated in the southern part of the country, in traditionally tourist areas of Valais, Ticino, and Graubünden.

But a number of them are also located in other regions, like the Bernese Oberland and St. Gallen.

You can see each individual region on a map, here.

Note that in many of these areas, the proportion of holiday homes exceeds 50 percent.

That’s because the legislation limiting these properties to 20 percent went into effect in 2016, while many houses in tourist areas were built before that date. 

Does this mean you can no longer buy a second home in these communities?

No. You can purchase existing properties, but you can’t build new ones.

Also, if you happen to own a primary residence in these towns, you can’t all of a sudden decide to convert it into a holiday home.

This, in fact, has proven to be a problem in several cities, including Geneva, where primary residences have been transformed into holiday homes, which means they can no longer be rented out to permanent tenants.

This ‘transformation’ exacerbates the overall housing shortage.

Last but not least: does owning a second home in Switzerland allow you to live here full time?

Good try, but no.

Buying a home in Switzerland does not generally give any additional rights with regard to residency. 

If you are a EU citizen or national of EFTA (Norway, Iceland, or Liechtenstein) , then you will be able to live in Switzerland, as long as you have enough money to support yourself.

Non-EU / EFTA citizens will usually only be able to spend time in Switzerland under the 90/180 rule — which means a  maximum of 90 days in Switzerland out of 180 consecutive days.

READ ALSO: Can second-home owners extend their stay in Switzerland? 

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