In Switzerland, fewer households are able to afford buying their own homes as prices for apartments and houses continue to rise. The Swiss population is known for being renters, with a low home ownership rate compared to other European countries. Only 36 percent of permanently occupied apartments in Switzerland are owned by their occupants. The home ownership rate had been steadily increasing from 1970 to 2015, mainly due to the rise in condominium ownership, but has seen a decline of around 2 percentage points since 2015.

According to a study by UBS, only 15 percent of Swiss households can afford the “median home” today, compared to 60 percent two decades ago. This “median home” is estimated to cost around 880,000 francs, requiring a household income of 150,000 francs, significantly higher than the median household income of 115,000 francs. The increase in interest rates between 2021 and 2023 has also made homeownership more expensive, with running costs for a condominium purchased for 800,000 francs increasing by 50 percent to 26,000 francs per year.

Buying a home is especially challenging in larger urban areas and their surrounding regions, where households often need twice or even three times the Swiss median income to afford a 4.5-room condominium. Financial institutions typically require that housing costs do not exceed a third of the buyer’s gross income, factoring in mortgage interest rates of 5 percent and additional costs.

Despite the difficulties in affording homes, the desire for home ownership among Swiss residents remains strong. A survey by Wüest Partner found that 46 percent of tenant households with residents aged 30 to 50 are considering buying a home. However, the study also highlighted a growing gap between the desire for home ownership and the actual affordability of homes, with median prices for typical condominiums and single-family homes being higher than what medium-sized households could afford based on their gross income.

UBS predicts that home prices in Switzerland will continue to rise in 2023, with prices for condominiums and single-family homes both expected to increase. Factors such as foreign buyers with purchasing power and a recovering economy could lead to further price increases in the coming years.