Swiss Real Estate Market in Q1 2025: Developments and Trends

Stable Demand Despite Economic Uncertainty

Despite global challenges, the Swiss real estate market remains stable. While economic weaknesses in Europe and China create uncertainty, Swiss households benefit from declining inflation and rising real incomes. The service sector continues to create jobs, albeit at a slightly slower pace than in previous years. These factors support the real estate market, particularly the demand for homeownership.

Increasing Demand for Mortgages Due to Attractive Interest Rates

The Swiss mortgage market has gained momentum in the first quarter of 2025. The Swiss National Bank’s interest rate cut has led to attractive financing options, especially for fixed-rate mortgages. These have become increasingly popular: by the end of 2024, over 75% of buyers opted for a fixed-rate mortgage, a significant increase compared to previous years. Long-term mortgage options are gaining attention again, as interest rates remain relatively low.

SARON mortgages remain an interesting option for flexible borrowers, particularly since the SNB has not ruled out further interest rate cuts. However, this financing model carries risks, as future interest rate increases could lead to unexpected rises in monthly costs. Those seeking long-term security can currently benefit from fixed-rate mortgages that offer stability at favorable conditions.

For prospective property buyers, the current interest rate environment offers noticeable relief in financing costs. This not only affects the demand for homeownership but could also have long-term implications for property prices. Those interested in buying should compare various mortgage offers to secure the best possible terms.

Rising Demand for Homeownership Due to Lower Financing Costs

With lower interest rates, homeownership is becoming increasingly attractive. Buyers can currently save up to 30% on their housing costs compared to renting, prompting many to purchase a property. The number of single-family home transactions increased by 4% in the second half of 2024, while condominium sales saw a 6.5% rise. At the same time, property prices are showing renewed growth after being slowed down by higher interest rates in previous years. This trend may continue, particularly if interest rates remain low.

Rental Market Shortage Remains a Challenge

While conditions for buyers are improving, the rental market remains tight, as low new construction activity continues to drive up rents. Finding suitable housing is particularly challenging in urban centers, limiting mobility in the rental market. Although a reduction in the reference interest rate could provide temporary relief for existing tenants, rents overall continue to rise.

Find more details on the current market situation here.

The Possible Abolition of the Imputed Rental Value and Its Impact

The possible abolition of the imputed rental value remains a key topic in political discussions. The Swiss Parliament has approved a reform that would exempt homeowners from paying taxes on fictitious rental income. However, this would also eliminate important tax deductions, such as interest payments and maintenance costs. For second homes, a new property tax is planned to offset lost tax revenue in affected cantons, which could face resistance in tourism regions.

The final decision on this reform lies with Swiss voters in an upcoming referendum. Critics fear financial disadvantages for homeowners, particularly those who rely on tax deductions. Owners of older properties with high renovation costs may be especially affected.

Supporters argue that the imputed rental value is an outdated and unfair system, as it imposes taxes on non-existent income. Given rising property prices and increasing maintenance costs, they see the abolition as a fairer solution that would relieve homeowners—especially in urban areas.

For more in-depth information on the topic, check out our blog post on the imputed rental value.

HYPOHAUS – Your Trusted Partner in the Real Estate Market

Whether buying or renting, navigating the Swiss real estate market remains challenging. While low interest rates make homeownership more attractive, tenants face rising prices and limited availability. Prospective buyers should closely monitor market trends and explore financing options early on.

At HYPOHAUS, we are your trusted partner in finding the best mortgage solution. We compare different financing options and tailor recommendations to your individual needs. Get expert advice and benefit from the best conditions. Discover our services here.