The Swiss real estate market continues to perform well, in contrast to neighboring countries where property prices have declined.
House prices in Switzerland have risen by 3.8% over the past year, with a more modest increase of 2% in the last six months. This is in stark contrast to Germany and France, where property prices have dropped by 12.2% and 4.5% respectively over the same period. The Swiss market has shown resilience, with an 8.9% increase in private residential property prices over the past two years. This makes Switzerland stand out in the European landscape.
The availability of financing has played a significant role in the upward trajectory of property prices. Interest rates for ten-year fixed-rate mortgages and Saron mortgages are currently very similar, creating favorable conditions for potential buyers. Strong demand driven by immigration also contributes to the positive momentum of the Swiss property market, particularly in the investment property sector, which has seen consistent growth over the past 25 years.
The investment property market in Switzerland remains attractive, with no signs of a price bubble despite minor fluctuations. The Swiss National Bank is expected to continue cutting interest rates, further stimulating demand for residential properties. This is likely to lead to rising rental prices, although existing rents will adjust in line with the reference interest rate. The housing shortage is not limited to urban areas but is also felt in the mountain regions, where the popularity of holiday apartments has exacerbated the scarcity of available housing.
In the mountain regions, there has been a surge in demand for holiday apartments, leading to some communities exceeding the legal limit of 20% for second homes. This has resulted in a 14% increase in holiday apartment prices over the past year, driven by the appeal of destinations at higher altitudes, particularly due to the impact of climate change on winter sports. The growing gap between rental prices and wages presents a significant challenge for locals and seasonal workers, who may have to face longer commutes as affordable housing becomes increasingly scarce.
There are significant regional disparities in the Swiss property market, particularly in pricing. Geneva has the highest prices, with a typical model apartment costing CHF 2.22 million ($2.5 million), followed closely by Zurich at CHF 2.12 million. Mountain resorts such as St. Moritz and Zermatt also command high prices, reflecting the demand for luxury properties in scenic locations. Other holiday destinations, including Val de Bagnes and Saanen, have surpassed major cities like Basel and Bern in terms of property values, highlighting the changing dynamics of the Swiss real estate market.
The appeal of holiday apartments in the Swiss Alps continues to attract investors, with low vacancy rates in tourist regions indicating a shortage of housing. This situation is particularly challenging for locals, as the demand for second homes drives up prices and limits availability. Ticino is the only region currently experiencing a vacancy rate above 3%, suggesting that the housing crisis is widespread across the country. As the market evolves, the affordability and accessibility of the Swiss property landscape remain pressing concerns for residents and policymakers.