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How to decide where to live in Switzerland based on affordability

How to decide where to live in Switzerland based on affordability
Cost of childcare can be high in Switzerland. Photo by cottonbro on Pexels
Life in Switzerland is expensive, so finding a place to settle in according to your needs and financial possibilities is important.

Some guidance about this issue is provided in a new Credit Suisse study, which lists five factors that help choose residence in terms of affordability.

This is part of wider Credit Suisse research released this week assessing the cost of living in various Swiss cantons.

It found that Appenzell Innerrhoden has the lowest cost of living for the average household, followed by Uri and Glarus. Next are Schaffhausen, Jura, Appenzell Ausserrhoden, Valais and Thurgau.

On the other hand, Geneva has the highest cost of living, followed by Basel-City, Vaud, Zurich, Basel-Country, Zug, and Neuchâtel.

READ MORE: Cost of living: The most – and least – expensive cantons in Switzerland

So what are the five decisive factors to consider in search of a home?

Taxes

“Income and wealth taxes add up to nearly 12 percent of a person’s average gross income, accounting for one of the biggest portions of household spending”,  Credit Suisse economists said, basing their finding on the Household Budget Survey of the Swiss Federal Statistical Office for the period 2015–2017.

And since cantons are in charge of taxes, there are significant regional differences in this regard.

Credit Suisse’s 2020 cantonal tax burden ranking lists Zug as the most attractive canton, tax-wise.

Next are Nidwalden and Uri. On the other hand, tax rates are well above average in French-speaking parts of the country, except in in Geneva.

And taxes vary even within the cantons, with some municipalities imposing lower rates than others.

Cost of housing

Housing is another major expense for Swiss households, sometimes accounting for about one-tenth of the family budget, according to the Household Budget Survey for 2015–2017. The burden is even higher for low-income families.

Cost of single-family homes vary according to regions, with housing costs being higher in metropolitan areas and low-tax regions than in rural areas.

However, Credit Suisse found that due to low mortgage interest rates, the monthly cost of owning a home has been lower than renting a comparable property.

READ MORE: How Covid-19 changed housing priorities in Switzerland

Commuting expenses

This is an important factor because nearly 70 percent of Switzerland’s labour force works outside their town of residence, and just under 20 percent cross the border on their way to and from work.

More than half of commuters drive to work, while about a third use public transportation.

As expenses for commuting to and from work can be partially deducted from from taxable income, some people accept longer commutes. Depending on the canton of residence and the distance they have to travel to work, commuters can deduct over 30,000 francs in expenses,  Credit Suisse said.

“Motor vehicle taxes also differ from canton to canton. Many cantons impose lower tax rates on electric cars – or even grant their owners complete exemptions”, the study reported.

Health insurance

For many people and families this constitutes one of the major expenses.

“Health insurance premiums are one of the biggest non-discretionary expenses paid by households. Rising life expectancy and greater prosperity have led to a continuous increase in this budget item in recent years”, Credit Suisse economists noted.

Here too, the cost varies depending on the place of residence and these regional differences can be significant.

For instance, an adult in Appenzell Innerrhoden (Switzerland’s cheapest canton in terms of the overall cost of living) will pay a premium that is over 3,000 francs lower than in Basel-City, one of the most expensive regions.

 Also, the differences in premiums and disparities in individual premium discounts “result in sharp regional contrasts in net premiums, especially for low-income households”, according to the study.

Childcare costs and family allowances

For working parents, childcare services often represent a major expense, depending on the family’s income and whether or not they are entitled to subsidies. Here also there are differences between regions in the fees charged by childcare facilities and the subsidies offered by cantons and municipalities.

The family-specific tax deductions, childcare costs and child allowances vary from canton to canton.

While some cantons adhere to the minimum rates required by Swiss federal law —at least 200 francs a month for each child — others grant higher allowances.

“When all parameters are taken into account, Valais has the highest level of attractiveness for families from a financial standpoint”, Credit Suisse concluded.


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