Switzerland’s real estate market offers both challenges and opportunities for foreign buyers. With low homeownership rates and rising prices, especially in urban areas like Zurich, Geneva, and Basel, foreigners must navigate strict regulations and a complex buying process.
Homeownership in Switzerland
Homeownership levels in Switzerland are among the lowest in the world, with significant regional differences. For instance, ownership is particularly low in cities like Basel and Geneva, while Zurich sees nearly a third of residents owning their homes. Older Swiss residents tend to be more likely to own property; around 47.5% of those over 65 are homeowners, compared to only 26.1% of those aged 25-65.
The majority of homeowners in Switzerland reside in rural areas. This trend reflects a combination of factors, including rising property prices, population growth in cities, and the bureaucratic hurdles that slow down the home-buying process. The Swiss National Bank has also introduced regulations to curb mortgage debt due to significant house price inflation in recent years.
Should You Rent or Buy in Switzerland?
Many expats opt to rent when moving to Switzerland due to the hot property market and the slow home-buying process. Renting, however, isn’t always easy, especially in popular areas where the rental market is highly competitive. Landlords often receive numerous inquiries for each property, making it difficult to secure a rental in certain locations.
House Prices in Switzerland
Swiss house prices have been rising steadily since 2019, with a year-on-year increase of 2.1% in September 2020. Between 2000 and 2016, property prices increased by an impressive 80.5%. This growth prompted the Swiss National Bank to implement stricter lending rules and abandon its cap against the euro to reduce investor demand.
In December 2020, the average asking price per square meter for a city center apartment was CHF 12,938 in Zurich, CHF 13,426 in Geneva, and CHF 13,967 in Lausanne. These prices reflect the high demand and limited supply in Switzerland’s urban centers.
Can Foreigners Buy Property in Switzerland?
Foreigners face strict restrictions when it comes to purchasing property in Switzerland. However, some categories of foreigners are allowed to buy property:
- EU or EFTA nationals with a Swiss residence permit who reside in Switzerland
- Holders of a Swiss C Permit
These individuals have the same rights as Swiss citizens and can buy investment properties, holiday homes, or commercial premises in addition to their primary residence. Swiss B Permit holders can also buy property, but only for personal use as a primary residence.
Other foreigners, such as non-residents or those without a Swiss work permit, may face more restrictions. They might need to apply for a license to purchase property, and the criteria for approval vary from canton to canton. Licensing often favors those purchasing a primary residence who have been settled in a canton for five years or more.
Costs of Buying Property in Switzerland
Despite Switzerland’s high property prices, transaction costs for buyers are relatively low compared to other European countries. The total costs usually range from 0.25% to 3.55% of the property price. Buyer’s costs typically include:
- Real Estate Transfer Tax: 0.2% to 3.3%
- Registration Fee: 0.15%
- Notary Fees: 0.1%
The seller, on the other hand, can expect to pay between 3.23% and 5.38% in transaction costs.
How to Find a Property in Switzerland
Swiss properties are widely available through online platforms, estate agents, and property portals. Listings are also found in newspapers and specialist property publications, often available for free in shopping malls and real estate offices. High competition for rental properties in major cities means that some apartments may be let before they even appear online.
Property sales in Switzerland tend to move slowly, and local knowledge can be crucial. It’s advisable to register with a local agent who has access to off-market properties. Major property portals include Homegate, ImmoScout24, ImmoStreet, and UMS Temporary Housing. Large real estate agencies like Moser Vernet & CIE, Naef, and Privera also offer a range of services to buyers.
Zoning regulations in Switzerland are strict, and while non-agricultural workers can buy existing properties on agricultural land, there may be limitations on new construction or modifications.