The Swiss real estate market looks back on a strong year in 2025. Prices for owner-occupied residential property once again rose significantly. Based on transaction prices, price levels as of the third quarter were already around 3 to 4% higher than the previous year. In light of historically low interest rates, ongoing immigration, and a persistently strong desire for home ownership, the question is whether these factors will automatically trigger another real estate boom in the coming years.

The answer is rather nuanced. Certain structural tensions suggest that such a boom is by no means guaranteed.

Buying is considerably more attractive than renting, and expected to remain so

A key driver of the recent price development is the significantly increased economic attractiveness of home ownership compared to renting. Since the decline in mortgage rates in 2024, monthly housing costs for owners, depending on the financing structure and the amount of equity, are in most cases lower than comparable rental costs. For similar properties, ongoing monthly costs when purchasing are typically around 20 to 25% lower than the corresponding rental costs, depending on the financing structure.

We currently do not expect either a key interest rate hike by the SNB in the year ahead or, by extension, any substantial increase in rates for long-term fixed mortgages. Combined with the persistent shortage in the rental housing market and further rising rents, home ownership is likely to retain its cost advantage over renting.

Transaction activity increases further

Thanks to stable interest rates and the increased attractiveness of home ownership, more buyers are again entering the market. The fact that these buyers are both willing and able to pay the asking prices is evident in a higher number of single-family houses and owner-occupied apartments sold in 2025. At the same time, prices have continued to rise.

Overall, this is a positive sign for the market: buyers and sellers are finding each other more frequently again, increasing overall market liquidity. Currently, demand exceeds supply, which is reflected in rising prices. If this imbalance persists, as has been the case in the past, property prices are likely to continue to rise steadily.

Bank financing is becoming a structural hurdle

On the demand side, the market continues to be supported by a solid economic development and ongoing immigration. Although both factors have weakened somewhat, they remain effective overall, which is why risks on the demand side appear to be limited. Rather, the main hurdle is shifting to financing: in many instances, purchases fail not due to a lack of buyer interest, but because banks do not grant the desired mortgage amount.

When prices rise faster than incomes and savings

If property prices rise faster than incomes and savings, fewer buyers inevitably meet the criteria to secure a mortgage. Since the pandemic, property prices based on transaction price indices have increased by around 20 to 40% depending on the region. This development is clearly decoupled from the wage growth of most Swiss households.

This is not only frustrating for savers, whose capital barely grows with interest rates near zero, but also has a direct impact on bank financing. Many potential buyers mistakenly assume that banks generally finance up to 80% of the purchase price. They set their savings goals for home ownership accordingly.

If the same property now costs around 20% more, a proportionally higher amount of equity is not sufficient. If income remains unchanged, the price increase of around CHF 180,000 cannot be covered largely by a higher mortgage, as the affordability is no longer met from the bank’s perspective. Instead, not only must the full additional price, but also an extra amount be covered by additional equity. This is because the higher purchase price leads to higher imputed maintenance and ancillary costs, further reducing the maximum acceptable mortgage amount.

Marketing is becoming more demanding

As the pool of potential buyers shrinks, the marketing process also becomes more challenging. This is clearly reflected in increased listing durations. The following map compares the insertion period for new-build properties in 2025 with that in 2021 across the three hotspot regions of Basel-Landschaft/Aargau, Zurich, and Bern.

The picture is clear: the distribution of marketing periods has clearly shifted to the right, indicating longer selling times. The chart depicts the middle 50% of all listings in each case. If additional quantiles are considered, the range of insertion times widens significantly.

Investors focusing on trading properties have benefited considerably from market conditions in recent years. Strong demand for owner-occupied housing and scarcity in the rental market provided support. However, as prices rise and banks apply stricter lending standards, marketing risk increases. This may lead to undesirable delays in the sales process.

Such delays can currently be partially bridged by interim rentals. Yet, for investors under time pressure, with high leverage, or operating on narrow profit margins, this can quickly become a significant risk.

This is why, in trading properties, it is crucial to understand the relevant buyer groups economically and to plan on a sound basis for decision-making, so that the targeted sale price can be achieved within a realistic and manageable timeframe. Likewise, for prospective buyers aiming to acquire residential property in the foreseeable future, it is essential to have their financial situation reviewed early by professionals and to clarify mortgage options realistically, to avoid unexpected constraints.