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Is now a good time to buy property in Switzerland?

Real estate — single-family houses as well as apartments — are not exactly cheap in Switzerland at any time. But their cost can go up or down, depending on the mortgage rates.

Is now a good time to buy property in Switzerland?
Whether or not to buy property now depends on mortgage rates. Photo: Pixabay

Geneva and Zurich have traditionally been — and still remain — the most expensive markets for home buyers not only in Switzerland, but among the priciest in Europe as well.

Prices are also high in Basel, Zug and Lausanne, that is, urban centres with a high concentration of multinational companies and residents.

One major reason for such 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.

That is a reason why most people in Switzerland are tenants rather than owners.

However, while the prices of land in high-demand areas hardly ever drop (if anything, they go up), they may be more affordable if mortgage rates are really low.

For instance, at the beginning of 2021, a 10-year mortgage cost 1.1 percent on average across the country. Currently, 10-year rates stand at 2.90 percent.

“Mortgage rates have risen extraordinarily strongly since the beginning of the year”, Felix Oeschger, analyst at Moneyland, an online price comparison service, told The Local.

READ MORE: This is where you can buy cheaper properties in Switzerland

Why is this happening?

Blame it on inflation.

Although Switzerland is doing better on this front than other countries, with the inflation rate much lower than across the eurozone, prices of consumer goods —including mortgages — have risen here nevertheless

As to how long it will take for mortgage interest rates in Switzerland to fall again. “this depends on many factors, such as the further development of inflation”, Oeschger said.

“Forecasts are difficult in this regard, as is also shown by the fact that the central banks have constantly revised their inflation forecasts upwards in the past year”.

Therefore, “a further rise in interest rates “would not be out of the ordinary”, Oeschger said.

So should you take out mortgage now or wait for better times?

The natural response, based on the information above, would be to sit tight and wait until inflation — and therefore, mortgage rates — go down.

However, while the increase in rates between last year and now may seem steep, Oeschger points out that “if you look at Swiss mortgage rates over a slightly longer period of time, for example over the last 15 years, they are only slightly above average”.

While this may dissuade potential home buyers from purchasing now, it may, in fact, be a good time to do so if you want to avoid future increases.

“If it is urgent to take out a fixed-rate mortgage, I would rather do it now than wait”, he said.

READ MORE: EXPLAINED: How to save on your mortgage in Switzerland

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For members


Where in Switzerland are you most likely to find flats for rent?

The housing shortage in Switzerland is getting worse, with fewer apartments available for rent. But the situation varies from one region to another.

Where in Switzerland are you most likely to find flats for rent?

There are currently just over 60,000 vacant dwellings in Switzerland — 1.3 percent of the total number of apartments in the country — the rate which is “particularly low”, according to data released on Tuesday by the Federal Statistical Office (FSO).

The number of available apartments is the lowest in 20 years, FSO said.

This finding corresponds to the results of a study released earlier in September by Credit Suisse, which reported that “this decline is due to the slowdown in construction activity and the sharp increase in demand linked to economic growth and immigration”.

All that, in addition to the scarcity of building land, and the shortage of dwellings is expected to continue as demand rises.

Where is it easiest and hardest to find apartments for rent right now?

This situation doesn’t impact the whole country the same way — this means that while in some cantons and cities housing is scarce, in others there are enough vacancies.

Not surprisingly, the most in-demand markets are also the ones that are most affected by shortages in homes for rent.

The canton of Geneva is the most affected, followed by Vaud, Zurich, Zug, and Basel-Country.

Unfortunately for new arrivals from abroad, these are also the areas where most of Switzerland’s international community chooses to settle because most job opportunities are found there.

READ MORE: Where do Switzerland’s foreigners all live?

Basel-City, Bern and Lugano are the only cities that are bucking this trend.

However, the picture is not totally grim.

If you don’t have your heart set on living in, or very close to, a large city, then your chances of finding a dwelling are bigger.

And if you are not averse to living in a rural area, you can probably find a flat relatively easily in the cantons of Jura, Schaffhausen, and Glarus.

But it is the Fribourg village of Montet that has the highest rate of empty apartments.

Size matters

The shortages exist not only in certain regions but also in the types of dwellings.

Three and four-room accommodations (which in Switzerland means a living room, bathroom, kitchen and two or three bedrooms) are most in demand and therefore hardest to find.

Smaller flats, with only one bedroom, are also not easy to come by, according to FSO.

This interactive map shows what the housing situation is right now in all Swiss communities.

Highest and lowest rents

As a rule, areas in and around major cities and economic hubs (especially multi-national ones) have higher rents than smaller, more remote towns and rural areas.

For instance, rents in the region of Zug and Zurich, as well as Lake Geneva (which comprises the city and canton of Geneva, and parts of Vaud), are the highest in Switzerland, while Jura, Neuchâtel and non-touristic areas of Valais are much cheaper.

This means, unsurprisingly, that areas where the demand is highest and the number of available units is lowest are also the areas where rents are the steepest.

READ MORE: Swiss rents: This is where cheapest and priciest apartments are