Will the cost of buying or renting a home in Switzerland go up in 2024?

With the new year underway, many are curious about how the Swiss housing market will change in the next 12 months. Some experts have shared their opinions on whether the cost of buying a house in Switzerland will decrease, what will happen to renters, and if the rental value tax will be eliminated.

How will house prices change in Switzerland in 2024?

For homebuyers, Raiffeisen chief economist Fredy Hasenmaile predicts a slight drop in house prices in 2024, especially for apartments. This follows a 1.3 percent increase in average house prices between the third quarter of 2022 and 2023, according to data from the Federal Statistical Office. However, caution is advised, as house prices are not expected to decrease significantly and will likely remain unaffordable in most cantons. Hasenmaile explains that a drastic change in the price curve is unlikely due to a shortage of owner-occupied housing.

How will Swiss mortgage costs change?

For those seeking a Swiss mortgage, there is some good news, with 10-year fixed mortgage rates currently around 2 percent, a 1 percentage point decrease from autumn 2022. Despite the possibility of initial rate increases, most mortgage providers anticipate the Swiss National Bank cutting interest rates sooner than expected. Hasenmaile suggests that a drop in mortgage interest rates is possible by spring, with rates expected to be lower than today by the end of 2024.

Will the imputed rental value tax be eliminated?

Regarding the potential elimination of the imputed rental value tax, Usina Kubli, head of real estate research at Zurich Cantonal Bank, indicates that it won’t be a quick process. Although there is progress toward ending the policy, parliamentary agreement and a possible referendum are still pending. The future will reveal whether an agreement can be reached and if the abolition of the rental value tax will withstand a referendum. Some express skepticism, citing budgetary concerns in Bern and reluctance to give up additional tax revenue from the rental value tax.

How will rental costs in Switzerland change?

Moving on to rental costs, Kubli notes that the growing shortage in the rental housing market persists due to insufficient housing construction in Switzerland. She predicts intensified housing shortages in major cities in 2024, making it harder to find affordable homes. Additionally, rents are expected to automatically increase due to the 3 percent rise in the reference interest rate announced in December 2023, effective in most cantons in April 2024. Raiffeisen predicts no further rise in the reference rate for several years after this. Those who pay for utilities directly as part of their rental contract will also face higher prices, with electricity expected to be 18 percent more expensive on average in 2024.