Swiss real estate prices rose in 2024, and the outlook for 2025 supports this trend.
We’re talking here about an increase whose dynamic, albeit moderate compared with previous years, takes account of structural and economic factors.
Indeed, as WĂ¼est Partner points out, job security, correlated with low unemployment, as well as rising real wages and wealth, limit the chances of a short-term turnaround.
Increased demand and limited supply
Demand for real estate has been strengthened by low unemployment and positive trends in real wages and wealth.
However, the low level of construction activity reflects this increase in demand outstripping supply.
This shortfall has still not been made good, despite a visible upturn in 2024 (+30% for apartments). It should be added that building permits for houses and apartments have long stagnated.
In addition, the vacancy rate in Switzerland on June 1, 2024 was estimated at 1.08%. For example, the average rates in the cantons of Fribourg and Vaud were below 2023. In fact, 21 of the 26 cantons are below the optimum rate. We are witnessing a scarcity of housing due to the
- increase in population.
- shortage of building land.
- regulatory complexity.
- the influx of opposition.
Another fact is that owner-occupied housing has lost some of its appeal, following the rise in interest rates. However, according to Raiffaisen, owner-occupied homes and detached houses are still very popular.
What are the forecasts for 2025?
WĂ¼est Partner indicates that more and more homebuyers are being priced out of the market, due to rising prices which are slowing down the real estate market.
There is talk of an increase of 3.4% for apartments and 3% for houses.
The focus will be on building high-end properties. Understandably, this leaves less room for more affordable solutions for the middle classes.
An opportunity for SIPA crowd immo to present its real estate crowdfunding formula, based on participatory financing, to both new and experienced investors.
A fluctuating demographic and financial context
It’s a fact that the population is ageing, and this is contributing to a timely supply of available properties. However, migratory pressure and the attractiveness of urban centers make this supply insufficient.
However, the ecological transition is needed to redefine buyers’ expectations.
For example, we’ll be focusing on environmental standards such as the RE2020, both for new and existing homes.
It has to be said that renovation brings added cachet to investors, who can pride themselves on having enhanced their real estate project with an eco-designed building. Now it’s up to Switzerland, like its neighbor France, to adapt.
Meanwhile, rising mortgage rates are making home ownership more difficult for first-time buyers,, but sellers continue to benefit from strong local and international demand.
Added to this, the shortage of housing, the slowdown in construction and strong demand are contributing to the rise in rents. However, by mid-2025, the Swiss National Bank could lower the key interest rate to 0.5% for existing tenants.
What are the issues and challenges ahead?
According to UBS Real Estate Bubble, prices are likely to remain high despite imbalances between supply and demand.
As we know, prices are high in the urban centers of Geneva and Zurich, so buyers are well advised to find investment opportunities in less sought-after regions.
The real estate market environment is characterized by strong demand and limited supply. This means that investors, buyers and developers have to adapt to diversified strategies.
Strong demand is stimulating construction activity, as are low interest rates and falling prices for building materials, despite years of inflation. A trend that is undoubtedly compromised by opposition to densification, environmental and banking requirements.
One of SIPA Crowd Immo’s missions is to make real estate investment accessible to all. This will start with the construction of housing at a price that is balanced on the market.
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