A new report from UBS has suggested that buying a home in Switzerland will soon be less expensive than renting in the long term. The bank predicted that with rental costs remaining sky-high and interest rates set to fall, the average cost of a Swiss mortgage will soon fall enough to make purchasing property financially beneficial.
As of March 2024, the average annual cost of owning a 4,5-room apartment in Switzerland (down payment, fees, mortgage) stood at 32.500 francs a year, 7 percent more than the annual cost of renting a similar home. However, UBS noted that the cost of owning a home has been falling compared to rental costs, with homeownership found to be 16 percent more expensive than renting in the summer of 2023.
Indeed, if someone had taken out a long-term mortgage in the middle of 2023, they are set to have annual costs of 50.000 francs by 2033.
Now, with the Swiss National Bank expected to cut interest rates twice by the beginning of 2025, and the shortage of housing in Switzerland set to continue, UBS predicted that it will soon be cheaper to own a home than rent one over the long term. Owning a home is expected to be 4 percent more expensive than renting at the end of 2024, before becoming cheaper in early 2025.
The report noted that in Canton Vaud, Fribourg and Valais, paying the associated housing taxes, utility and mortgage costs is already cheaper on average than renting over the duration of the mortgage. Purchasing property is also expected to be particularly beneficial in Bern, Solothurn, Aargau, Schaffhausen and Thurgau by next year.
While buying may soon be cheaper than renting in Switzerland in the long term, the initial financial barriers to buying a house (down payment, fees, etc) remain impassable for most - the country maintains the lowest rate of homeownership in Europe. A report from Wüest Partner in November 2023 found that homes are an average of 9 percent too expensive for families to buy.
In Zug, house prices were found to be 49 percent more expensive than what could be afforded by two working people in the canton with a mortgage - for a single-family house, this rate rose to 63 percent. By contrast, only seven Swiss cantons were found to offer apartments cheaper than what an average local family could afford, dropping to just two (Jura and Glarus) for single-family homes.