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Everything you need to know is included in our Switzerland Property Pack
Are you thinking of investing in property in the land of Alps? Are you thinking about whether you should buy now or postpone until next year?
Various opinions exist regarding market timing. Your Swiss friend might suggest that now is the worst time to buy property, whereas your colleagues in Zurich may have a different opinion and suggest waiting for better opportunities.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Switzerland, we prioritize evidence-based work, relying on reliable data and statistics rather than personal opinions or rumors.
We've done extensive research on official reports and government website statistics, resulting in a comprehensive database. Here's what we've learned, which can provide valuable insights for your decision-making process regarding real estate purchase in Switzerland.
Dive in and enjoy!
How is the property market in Switzerland currently?
Switzerland is, today, an incredibly stable country
Positive
If you want to invest in real estate, prioritize stability as it fosters a reliable and thriving market environment, attracting both domestic and foreign investors. It is an information you need as a foreigner looking to buy a property in Switzerland.
You probably know it already, Switzerland is extremely stable. The last Fragile State Index reported for this country is 16.2, which puts it in the top 10 globally.
Switzerland's stability is largely attributed to its unique political system of direct democracy, which allows citizens to have a direct say in policy decisions, fostering a strong sense of civic engagement and consensus. Additionally, its robust economy, characterized by a highly developed financial sector, strong manufacturing base, and prudent fiscal policies, provides a solid foundation for sustained stability.
First signal is very positive, let's now look at the economic forecast.
Switzerland is positioned for growth in the coming years
Positive
Evaluate the country's economic condition before deciding to invest in property.
According to the IMF's estimations, Switzerland is set to conclude 2024 with a growth rate of 1.3%, which is promising. Regarding 2025, we're talking 1.4%.
This steady growth might keep going since Switzerland's economy is expected to increase by 6.9% during the next 5 years, resulting in an average GDP growth rate of 1.4%.
A moderate growth rate in Switzerland indicates a stable and reliable economy, which can provide a secure environment for property investments. This stability reduces the risk of significant market fluctuations, making it a safer long-term investment choice.
However, there are other factors to consider beyond GDP growth.
Swiss business owners still display resolute confidence in the economy
Positive
How do the Swiss view their economy? The GDP forecast doesn't provide a complete understanding. Luckily, in Switzerland there is an official metric that is frequently updated. We're lucky because this isn't true for every country.
The Business Consumer Index (BCI) is a metric used to assess business leaders' confidence in the current and future economic conditions, relying on surveys and assessments.
According to the Swiss Economic Institute (KOF)'s data, the latest Business Confidence Index value is 13 for Switzerland. This score is moderately good.
However, examining the data more rigorously, we identify a potential negative development: the trend is downward. The BCI score, 12 months ago, was at 18.
When local businesses in Switzerland maintain a sustainable level of confidence about the future, it presents promising opportunities for property investors. This indicates a stable economy with steady job opportunities and consistent income levels. Such a balanced outlook fosters a reliable demand for properties, creating a favorable environment for investors to earn rental income and potentially see property values appreciate over time.
Stagnation looms over Switzerland's housing market.
Neutral
Switzerland's home prices have increased by 15.3% in 5 years according to Swiss National Bank.
It means that if you had bought a chalet in the Swiss Alps for $800,000 five years ago, then it would now be worth around $922,000.
These days, the Swiss housing market is experiencing a bit ofstagnation in its growth. Property values have demonstrated minimal changes, and market activity has experienced a plateau.
However, the slow growth observed in Switzerland's housing market can be interpreted as a positive signal and a promising sign for individuals seeking a secure investment environment. It indicates a level of stability and predictability in the market, which can be attractive for those prioritizing long-term and secure investments.
You can find a more detailed analysis of the real estate prices in our property pack for Switzerland.
Everything you need to know is included in our Switzerland Property Pack
Switzerland's population is growing and getting (a bit) richer
Positive
Population growth and GDP per capita are important factors to consider when buying real estate because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Switzerland, the average GDP per capita has changed by 2.0% over the last 5 years. It's not much, but the growth is here. Furthermore, the Swiss population is growing (+5% in 5 years).
This means that, if you purchase a mountain chalet in Zermatt and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be an increase in rental demand in Swiss cities like Zurich, Geneva, or Basel in 2025.
Rental yields are not high in Switzerland
Neutral
Now, we have to look at the rental yield.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Switzerland is purchased for CHF 1,000,000 and generates CHF 50,000 in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Switzerland offer gross rental yields ranging from 1.1% and 3.8%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Switzerland.
It means that your investment won't generate significant returns or income.
Everything you need to know is included in our Switzerland Property Pack
In Switzerland, inflation is projected to remain minimal
Neutral
Inflation is the general increase in prices of goods and services over time.
It's when your regular train ride from Zurich to Geneva costs 50 Swiss francs instead of 45 Swiss francs a couple of years ago.
If you're planning to invest in a property, high inflation can offer several benefits:
- Property values often increase over time, leading to potential capital appreciation.
- Inflation can lead to higher rental rates, thereby increasing the cash flow from the property.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can serve as a hedge against inflation, safeguarding the value of the investment.
- Diversifying into real estate provides stability during periods of inflation.
According to the IMF, the inflation rate in Switzerland will increase by 1.0% over the next 5 years, with an average annual increase of 0.2%.
This data infers that Switzerland is expected to have near-zero inflation then. Unfortunately, buying a property now may not lead to significant price increases or high profits in the future.
Is it a good time to buy real estate in Switzerland then?
Let's wrap things up!
Switzerland is known for its incredible stability, both politically and economically. This makes it an attractive place for property investment, as the risks associated with market fluctuations are significantly reduced. With the country's economy expected to grow by 6.9% over the next five years, resulting in an average GDP growth rate of 1.4%, this steady growth provides a solid foundation for potential property buyers. Investing in a stable economy like Switzerland's can offer peace of mind, knowing that your investment is less likely to be affected by sudden economic downturns.
One of the key reasons why 2025 could be a good time to buy property in Switzerland is the moderate growth rate of its economy. This growth indicates a reliable and secure environment for property investments. Unlike markets that experience rapid booms and busts, Switzerland's moderate growth suggests a more predictable and manageable investment landscape. This makes it an appealing option for those looking to make a long-term investment in real estate.
Despite the looming stagnation in Switzerland's housing market, the country's population is growing and becoming slightly wealthier. This demographic trend could lead to increased demand for housing, potentially driving up property values over time. As more people seek housing, the market may gradually shift, offering opportunities for property investors to benefit from future appreciation in property values.
Additionally, Switzerland's rental market offers gross rental yields ranging from 1.1% to 3.8%, according to Numbeo. While these yields may seem modest, they are complemented by the country's low inflation projections, which are expected to remain minimal. This means that the real value of rental income is likely to be preserved, providing a steady income stream for property investors. Overall, the combination of economic stability, moderate growth, and favorable rental yields makes 2025 a potentially opportune time to consider investing in Swiss real estate.
We genuinely hope this article has provided you with valuable insights and information.. If you need to know more, you can check our our pack of documents related to the real estate market in Switzerland.
-Will real estate prices go up in Switzerland?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.