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EXPLAINED: Why is the price of properties so high in Switzerland?

Helena Bachmann
Helena Bachmann - [email protected]
EXPLAINED: Why is the price of properties so high in Switzerland?
Swiss properties are beyond most people's financial reach. Photo by Steffen Lemmerzahl on Unsplash

If you've been dreaming of owning a house or an apartment in Switzerland, you know how financially challenging this can be. There are several reasons why Swiss properties are so expensive and why so few people can afford to buy them.


There is an obvious paradox in Switzerland: in a country that has one of the highest per-capita GDPs in the world and is among the nations with the highest disposable income per resident, very few people live in their own homes.

In fact, with a 42 percent ownership rate, wealthy Switzerland lags behind much poorer European countries like Romania, where over 96 percent of residents own a home.

That rate is also high in other less wealthy European nations — Slovakia (92.3 percent), Croatia and Hungary (91.3), as well as other countries in Eastern Europe.

Why do so few people own a home in Switzerland then?

One explanation may be that Switzerland is an expensive country to live in, and that reason can certainly not be ruled out.

But if we look at Norway, another notoriously expensive, high-income European country, the rate of home ownership there stands at over 80 percent. 

This means that while the cost of living certainly plays a part in the overall prices, it is not the main reason for the high cost of properties.

Other factors play an important role as well:


The size

Switzerland is a very small country, where building land is scarce, and therefore correspondingly expensive. (In many parts of the country farming land cannot be zoned for construction).

This is particularly the case in densely populated urban areas whose geography sets restrictions on land expansion.

Geneva, for instance, is nestled in the southwest corner of the country, where it is wedged between France and Lake Geneva. The land for new constructions is therefore limited, impacting not only home ownership, but also availability of rental housing, as well as rents.

READ ALSO: Why is Geneva’s rent the highest in Switzerland?

Slump in the construction activity

Fewer apartments and houses are being built throughout the country, for several reasons.

The higher cost of materials is one, but there are others as well: many cantons and municipalities have stricter laws now regarding heights of buildings, as well as tougher noise ordinances to comply with.

Consequently, in 2022, building permits in Switzerland fell to a 25-year low.

A view of Geneva.

A view of Geneva. Photo: Pixabay

According to a March 2023 report by Credit Suisse, “construction activity in Switzerland has been declining …Between 2015 and 2018, 54,000 apartments were being built each year. The equivalent figure for 2022 was just 45,000".

For 2023 and 2024, "we anticipate housing production of only 42,000 units".

This significant drop in construction activity means higher prices for available properties.
Population growth

Switzerland’s current population is around 8.8 million residents, according to recent data from the Federal Statistical Office (FSO). 

"The higher the annual population growth rate is, the bigger the increase in property prices,” according to a report by Moneyland consumer platform.

The result of this demographic growth is “that real estate properties tend to continue climbing as long as Switzerland remains a particularly attractive destination for immigrants".

READ ALSO: How immigration is impacting Switzerland


Last but not least…mortgage rates

Until about a year ago, 10-year rates were around 1 percent.

Since 2022, however, they skyrocketed to — depending on various factors — 3 percent or even more for new customers.

Since a mortgage rate determines how much it costs to finance a property, this hike means many people are not able to afford a home.

Of course, even if the rates drop substantially, which is not on the horizon for the foreseeable future, the other factors mentioned above — scarcity of land, slump in construction, and population growth — mean that properties will remain out of financial reach for most of Switzerland’s residents.


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