Buying property versus renting in Switzerland: What is actually cheaper?

Buying property versus renting in Switzerland: What is actually cheaper?
For those who can afford it, buying a place to live in Switzerland is cheaper than renting - particularly for families. Here’s how much you’ll save if you can afford to buy.

A new report has found that buying a house in Switzerland will save you a considerable amount of cash over time – particularly for families. 

The report, prepared by Switzerland’s Raiffeisen Bank, showed that despite rising house prices – it was still considerably cheaper to buy in the long term when living in Switzerland. 

Average rental payments for a 3 to 4.5-room apartment in Switzerland – when compared to mortgage repayment costs – are 20 percent higher than buying a house of the same size on average. 

Renting in Switzerland costs almost 20 percent more than buying. Source Raiffeisen Economic Research

The study also takes into account maintenance costs and tax consequences. 

READ: This is how much it costs you to change apartments in Switzerland’s cities

High demand for rentals and low interest rates

The study finds that one of the major reasons for the cost discrepancy is a higher demand for rental properties than real estate. 

Another major reason for real estate prices being comparatively low in Switzerland is the country’s long history of low interest rates, which make mortgages more affordable. 

The high demand existing in the rental market, which in Switzerland like much of the world tends to be made up of younger people and/or people with less capital, has led to a cyclical situation where the owner-occupier market is effectively “undervalued”, according to the study. 

Lower-income people, who find it comparatively harder to secure financing to buy a new home, therefore face extra barriers in taking advantage of the financial benefit of owner-occupying a house in Switzerland. 

As the authors commented “Buying would still be attractive compared to renting despite high prices (of buying property). Changing from a rented flat to an owner-occupied home could help households to reduce their housing costs.

“However, especially for financially less well-off tenants, such as young families, it is more difficult for them to realize this savings potential because they do not receive financing.”

House prices still increasing despite comparative benefit

The study found that although buying is cheaper than renting – for those who can afford it – house prices are still on the up. 

The average increase of single family houses was around four percent in 2019, while condominiums rose by around one percent. 

Member comments

  1. Well, the report comes from a bank…of course from their interest buying is better than renting. But what is not calculated here is also the opportunity cost when you put your downpayment into a house, compared with other investment types, like stock market or buying property and renting them out or.. I think the calculation is much more complicated and should consider many financial and non financial reasons.

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