Swiss real estate prices are expected to continue rising as mortgage costs remain low, though supply-side constraints are keeping growth in check. In 2025, authorities approved just 5,100 single-family homes and 11,200 condominiums, less than half the volume recorded two decades ago, according to UBS economist Thomas Rieder. Structural factors such as limited land availability, regulatory hurdles and public resistance to densification are expected to persist, further constraining new construction.
The abolition of Switzerland’s imputed rental value tax, slated for no earlier than 2028, is amplifying price pressures by reducing the tax burden for homeowners. UBS estimates this could raise the cost advantage of ownership versus renting by about four percentage points, potentially boosting demand. The measure may also lift the overall value of Switzerland’s housing stock by 2% to 3%, though gains would reverse if interest rates rise. Newer condominiums are likely to outperform older properties, with the price discount for renovation-needy buildings widening by roughly five percentage points as maintenance costs become non-deductible.
Fiscal uncertainty looms as federal, cantonal and municipal governments seek to offset an estimated CHF 2 billion in annual revenue losses from the tax reform. Some cantons, particularly mountainous regions like Graubünden facing losses of about CHF 90 million, may introduce special property taxes on second homes to fill budget gaps. Local governments, with limited alternative revenue options, could face incentives to raise levies on property, a trend observed in countries such as Greece, Italy and Spain during the eurozone crisis.
Affordability is deteriorating as construction costs rise faster than household incomes, pushing more buyers beyond standard mortgage affordability thresholds. UBS data show median-income households can now afford a 100-square-meter condominium in just 17% of Swiss municipalities. To manage costs, many buyers are reducing unit sizes, with average new-build condominiums shrinking from 125 square meters at the turn of the millennium to around 100 square meters today.
Homeowners are also advised to accelerate energy-efficient upgrades before the tax reform takes effect. Under current rules, replacing an oil heating system typically amortizes over about 12 years, though the range varies widely by canton. After the reform, the average payback period could shorten to roughly 10 years if cantonal deductions remain, but could lengthen to about 17 years if such incentives are removed entirely.
