A family income of 200,000 Swiss francs is not enough.
23.04.2025Real estate prices are rising, incomes are stagnating, supply is growing only slowly, and low interest rates and immigration are driving demand. According to UBS’s “Real Estate Focus 2025”, this means that even households with an annual income of 200,000 Swiss francs are struggling to find affordable housing. What’s more, buying is once again significantly cheaper than renting. In addition, affordability rules are making it increasingly difficult for more and more households to buy their own homes, especially in the suburbs of Switzerland’s major cities.
UBS writes in its report: “The maximum loan-to-value ratio is determined by the so-called affordability calculation: the hypothetical expense, consisting of a calculated mortgage interest rate of 5 percent and a flat rate for amortization and property maintenance, must not exceed one-third of gross income. An owner-occupied apartment with 110 square meters of living space currently costs just under CHF 1 million on average. According to affordability regulations, a gross income of CHF 175,000 and CHF 200,000 in equity are required for 80 percent external financing. However, the average family household with children has a gross income of around 150,000 Swiss francs per year, which means that in 2024, only just under a third of all advertised homes with four or more rooms were affordable.
The Tages-Anzeiger newspaper also reported on the example of a single-family home: “For example, anyone who puts up 20 percent of their own capital to buy a single-family home for 1.5 million Swiss francs must earn at least 270,000 Swiss francs per year to pay the mortgage of 1.2 million Swiss francs.”
In addition, the limited supply is supporting prices, writes UBS. In the fourth quarter of 2024, only 3.8 percent of all condominiums and 2.8 percent of all single-family homes were on the market. This is also a consequence of the aging society; people often only consider selling their homes later in life, or do not consider it at all, because “suitable condominiums are rare and comparable rental apartments are financially unattractive. This delay in sales also reduces the number of properties on offer.”
However, UBS expects real estate prices to continue to rise: “Price momentum is likely to strengthen in the current year. We expect an increase of 3 percent for condominiums and 4 percent for single-family homes. We also anticipate a slight rise in home prices in the medium term. The stable economic situation, low mortgage rates, and limited supply are likely to further increase people’s willingness to pay. However, tight affordability is likely to limit stronger price increases.
UBS’s “Real Estate Focus 2025” contains lots more exciting information about the Swiss real estate market and its prospects.
You can download the full study as a PDF here.