The latest Wüest Partner study provides a detailed overview of the Swiss real estate market, highlighting recent developments in a changing economic environment.
Economic context
Inflation has decreased more sharply than expected, mainly due to falling fuel and imported goods prices. A reduction in the reference mortgage rate could put pressure on rents and help further reduce inflation in 2025.
The Swiss National Bank (SNB) is now considering the risk of inflation falling too low. Moreover, anticipated rate cuts by the U.S. Federal Reserve (FED) and the European Central Bank (ECB), combined with the risk of the Swiss franc being overvalued as a safe-haven currency, could prompt the SNB to lower its key interest rate, currently at 1.0%, potentially reaching 0.5% by mid-2025.
Rental housing
The availability of rental housing has further declined, as evidenced by lower vacancy rates and reduced supply volumes. According to the Swiss Federal Statistical Office (FSO), the number of vacant housing units fell by 5% in 2024, reaching approximately 52,000 units—a 34% decrease from the peak observed and a 39% drop in the rental housing segment.
This scarcity is driving a moderate increase in rents. In 2025, the average rent increase is expected to reach 1.9% nationwide, with variations across different regions.
Homeownership
The significant drop in mortgage rates has made external financing for homeownership more affordable. Since the peak in October 2022, annual financing costs have decreased by CHF 8,000 for average condominium apartments and CHF 11,000 for single-family homes, representing a decline of over 42%.
Despite this improvement, property prices have risen by 6.8% for condominiums and 4.2% for single-family homes over the past twelve months.
The construction of single-family homes, which accounted for 40% of housing at the beginning of the 2000s, has now fallen to just 12% nationwide. This reduced supply is contributing to rising prices in this highly sought-after segment.
Projections for 2025 anticipate a 3.4% increase in condominium prices and a 3.0% rise in single-family home prices.
Commercial spaces
Despite structural changes brought about by remote work, office sharing, and the rise of coworking spaces, the Swiss office market has shown remarkable resilience. After a temporary increase in supply following the pandemic, the volume of available office space decreased by 11% in 2024 compared to 2019.
For 2025, a moderate increase of 0.1% in office rents is expected nationwide. However, regional disparities are anticipated: in Zurich and Geneva, strong demand could drive further increases, while peripheral urban areas may see stabilization or even a slight decline.
Retail spaces
The retail space market remains under pressure due to the growth of e-commerce. However, demand is being stabilized by strong private consumption, steady population growth, and a favorable employment situation. A 1.5% average decline in commercial rents is expected by the end of 2025.
The temporary increase in supply in 2025 could reinforce this downward pressure. However, diversification strategies and technological innovation are creating new opportunities for physical retail stores.
Conclusion
The Swiss real estate market in 2025 will be shaped by a declining interest rate environment, strong demand for both rental and owner-occupied housing, and a gradual stabilization of the commercial and office space sectors. Macroeconomic developments and monetary policies will play a key role in the market’s future trajectory.
