SHARE
COPY LINK
For members

COST OF LIVING

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

For those who can afford it, buying a place to live in Switzerland can be cheaper than renting - particularly for families, although new research suggests this may be set to change.

Buying property versus renting in Switzerland: What is actually cheaper?
Photo: PATRICK KOVARIK / AFP

Renting is more common in Switzerland than any other European country, with the Alpine nation the only nation in Europe where less than 50 percent of people own the home they live in. 

The reasons for doing so however are complex, with the cost of buying a home a major factor. 

READ MORE: Why do so many Swiss prefer to rent rather than buy their own home?

Research into the Swiss property market however shows that buying can in fact be cheaper than renting, at least in the longer term. 

Here’s what you need to know. 

Property: Buying versus renting in Switzerland

High property prices and the need for a 20 percent deposit can make the costs of buying a house in Switzerland prohibitive, leading many to choose renting as a cheaper option. 

While this may be the case in the short term, over the long term however buying a property can in fact be the cheaper option in some cases – for those who can afford it. 

One of the major factors underpinning affordability in property is interest rates. Switzerland, with its history of minimal inflation, has long had low interest rates, which makes borrowing money a more attractive option. 

A report from 2020 found that buying a house in Switzerland can 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. 

However, economic uncertainty – such as the fallout from Russia’s Ukraine invasion and the lingering impacts of the Covid pandemic – can put upward pressure on interest rates. 

A Credit Suisse study from 2022 found that for the first time in 13 years, renting was actually a cheaper option than buying in the short term, due mainly to a rise in interest rates. 

According to the researchers “the first time in a long time, buyers or owners of a condominium have to pay more than for a comparable rental apartment”. 

The researchers compared advertised property prices and rents, comparing rental expenses with the costs of a five-year fixed mortgage. 

Renting was a cheaper option than buying due to a 45 percent increase in mortgage interest since the beginning of 2021. 

The costs however were compared on a yearly basis over five years and did not take into account the longer-term impact of paying a mortgage, i.e. that you actually own the home (or part of it) as you continue to pay it off. 

EXPLAINED: How to save on your mortgage in Switzerland

Demographic breakdown pushing higher demand in Switzerland

The 2020 study found that one of the major reasons for the cost discrepancy is a higher demand for rental properties than real estate, which is fuelled by Switzerland’s unique demographic breakdowns – particularly in urban areas. 

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. 

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

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. 

Around one in four Swiss residents are foreigners, or around one in two in urban areas like Zurich, Basel and Geneva.

Due in part to the difficulties in becoming naturalised, many of the foreigners who live here do not plan on staying in Switzerland in the longer term, which can contribute to even greater demand for rental apartments instead of condominiums. 

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 realise this savings potential because they do not receive financing.”

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 higher than 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.

Log in here to leave a comment.
Become a Member to leave a comment.
For members

COST OF LIVING

Six no-gimmick websites that help you save money in Switzerland

Sure, there are many adverts on the internet that claim to offer cheaper this and that, but more often than not, clicking on the link could cost you even more money (and time). However, there are also credible sites in Switzerland that will actually help you spend less.

Six no-gimmick websites that help you save money in Switzerland

When you live in an expensive country like Switzerland, getting more bang for your buck (or franc) may seem like an impossible feat.

Some residents of border areas save money by shopping for groceries in France, Italy, or Germany, where most products are much cheaper.

But not everyone in Switzerland has access to these stores and some people may actually prefer to support their own economy, even if it costs more.

READ MORE: Everything you need to know about the cost of living in Switzerland

These six sites will not help you save money on everything, but they will help you in that direction.

Comparis.ch is an independent comparison platform that provides well-researched and impartial information on best deals in a variety of areas.

They include lowest prices for insurance (health, life, travel, car, and others); properties (including loans and mortgages); vehicles; and mobile phone and internet plans.

You can also find price comparison for various electronics; toys; beauty and wellness services; car and motorcycle accessories, and other products and services.

Moneyland.ch is another, though similar, cost comparison website, where lowest prices for banking, insurance and telecom services can be found.

Like Comparis, Moneyland will often produce reports ranking certain products and services, such as healthcare and insurance plans, which can give you a valuable insight on how to save in Switzerland. 

We can’t tell you which of the two resources is better; visit both and see which one fits your needs. Both have a English-language pages, as well as producing reports in Switzerland’s national languages. 

Cost of living: How to save on groceries in Switzerland

Toppreise.ch

This comprehensive portal also lists prices for hundreds of products in a wide range of categories, including electronics; household items, and appliances; clothing and jewellery; and even wine.

You can get good deals on wine if you look around. Image by Holger Detje from Pixabay

Bonus.ch

This site compares prices of items ranging from foods to body care products at Coop, Migros, and Lidl.

The prices may not always be up to date (and may change as the war in Ukraine and inflation progress), but the site will nevertheless give you a good idea of which products are cheapest where.

READ MORE: 13 things that are actually ‘cheaper’ in Switzerland

Consumer sites

While these websites aim primarily at protecting and defending consumer rights, they also have some useful information on how to save money on various purchases.

For instance, the Swiss-German chapter, Stiftung für Konsumentenschutz has advice on how to save on customs taxes when purchasing goods online in foreign countries.

In the French speaking cantons, Féderation  Romande des Consommateurs has information on where in the region you can pick your own strawberries and save money while doing so, and in Ticino, Associazione consumatrici e consumatori della Svizzera italiana has similar information.

If you visit these consumer sites regularly, you will find helpful advice on how and where to spend less on certain products and services at that particular time.

Find out where picking your own strawberries will save you money. Photo: Anna Tarazevich / Pexels

And then there is this…
 
If you want to know how much the price of communal services such as water and waste management is in your commune and how it compares with other Swiss municipalities, you can check it out on this official government website.
 
It doesn’t tell you per se how to save money on these services but it is a useful resource nevertheless.

READ MORE: EXPLAINED: Why is Switzerland so expensive?

SHOW COMMENTS