The real estate market in Zurich is experiencing significant changes, with an increase in supply and a corresponding decrease in prices. Zürcher Kantonalbank (ZKB) has reported that there is a growing availability of properties, particularly new builds, which is a notable shift in a market that has historically been characterized by scarcity. This trend is particularly evident in Zurich, where new construction projects are being advertised despite a relatively stable number of building applications.
The current market conditions have led to a decrease in the premium associated with new builds compared to older properties. Currently, new constructions are priced around 10 percent higher than comparable older apartments, which is a significant contrast to the 20 percent premium observed a decade ago. This change reflects changing buyer preferences and suggests a more competitive environment for developers and sellers.
As the selection of available properties expands, buyers are finding themselves in a more advantageous position. The greater variety of options is increasing the likelihood of price reductions, especially in the market for existing single-family homes. Sellers are no longer able to command their asking prices as they once did, with a significant increase in transactions completed at prices below the initial asking price.
An analysis of vacancy notices across Switzerland reveals demographic trends that are impacting the real estate market. Individuals aged 25 to 35 have been particularly affected by vacancies, especially in urban areas and vacation destinations. In Zurich, the city accounts for 12 percent of all terminations in apartment buildings nationwide, highlighting the challenges faced by renters.
A significant portion of these vacancies is linked to non-profit housing developers, with one in four affected buildings in Zurich belonging to such entities. Many of those affected have been able to relocate to other apartments managed by the same developers or return after renovations. This adaptability is crucial in a market where finding new housing can be challenging, as two-thirds of those affected typically secure new accommodations within the same municipality.
The canton of Zurich is planning to update the imputed rental value for the 2026 tax period, which could have significant implications for property owners. The current calculation basis has remained unchanged since 2009, despite substantial increases in property prices and rents over the past decade. As a result, approximately half of property owners in the canton are expected to see an increase in their imputed rental value of more than 5 percent, with one in five facing increases exceeding 15 percent.
This adjustment is particularly relevant for owners of older properties, who will benefit from a longer depreciation period. On the other hand, owners of new buildings may face disadvantages as they are unable to take advantage of the same depreciation benefits. The anticipated rise in land values, especially in urban centers like Zurich, further complicates the landscape for property owners as they navigate the implications of these changes on their investments.
The evolving real estate market in Zurich reflects broader economic trends and demographic shifts, presenting both challenges and opportunities for buyers and sellers. Stakeholders will need to remain vigilant and adaptable to navigate the complexities of this dynamic environment.