How much do you need to earn to afford a house in Switzerland?
Properties are expensive in Switzerland and out of reach for most families. Here’s how much you should earn to turn a dream of home ownership into reality.
Real estate prices have been soaring in Switzerland in recent years, continuing to climb even during the coronavirus pandemic when much of the country’s economy came to a standstill.
While many experts feared that real estate market in Switzerland would collapse during the health crisis, the opposite has happened: price of properties went up by 5.5 to 5.6 percent.
Prices vary from one region to another, but the average for Switzerland is about 1.25 million francs for a single family home — price that is out of reach for middle-class people.
The most expensive regions for real estate are in or near urban centres of Zurich, Geneva and Basel. But some relative “bargains” can be found in Switzerland as well, especially in rural areas of some cantons.
For instance, a single-family home in Jura costs about 587,000 francs — the cheapest price in Switzerland, according to one study.
Glarus is slightly higher at 771,000, francs, followed by Valais at 783,000 francs.
It is perhaps not surprising, given how expensive properties are here, that Switzerland has the lowest proportion of home owners in Europe — just over 41 percent.
One major reason for such a low rate of home ownership — and high real estate prices — is scarcity of land.
Switzerland is a small country with little land left to be developed and the development of whatever land is available is strictly regulated; for instance, agricultural land can’t easily be used for construction.
And as Switzerland’s land is not expandable, “residential real estate will continue to appreciate in value”, Stefan Fahrländer, chairman of the board of Fahrländer Partner, a real estate consultancy firm in Zurich, said in an interview.
The only thing to stop prices from rising would be “a massive regulatory intervention or sharp rise in interest rates ”, he said.
Another reason for the shortage of homes is “because there are more and more people in the country”, according to Roman Ballmer from Zurich property firm Lazi.
“Even in 2020, the year of the pandemic, immigration increased and fewer people left the country”, he said. “For the few homes for sale, there are more and more auctions, with properties selling well above the original asking price”.
So how much should you earn to be able to buy a house?
This would depend on the kind and size of property, as well as its location.
Generally speaking, the minimum annual income allowing to purchase real estate in Switzerland should be 200,000 francs, Fahrländer said.
However, the property would be on the outskirts of cities and “not necessarily new and upscale”.
While the 200,000-franc annual salary (or salary with income from investments) is not rare in a Swiss household where both spouses work full-time, it is above the average wages — about 63,000 francs — of middle-class families . This salary level is higher than almost anywhere in Europe, but still not enough to afford a home.
Those earning less than 200,000 francs a year usually “can get their own housing only by inheritance”, Fahrländer noted.
This particularly impacts young families.
“Young people can save as much as they want but if they don’t inherit, their dream of owning a house will not come true”, according to Ballmer