Real Estate
Swiss homeownership
compared to European countries 2018
Homeownership rate is an important indicator of the real estate market and housing situation in a country.
According to a study from 2018, Switzerland has a lower number of homeowners compared to most European countries and surprisingly ranks last. Only 42.50% of the Swiss population are homeowners, while most residents rent their homes.
This situation may be surprising, especially considering the country's financial strength. Historically, Switzerland's homeownership rate has remained relatively low and has seen little change until today. This could be attributed to various factors, including a complex tax system, high property prices, stringent building regulations, and a culture that emphasizes the advantages of renting.
It is important to note that the homeownership rate does not necessarily serve as a measure of the quality of life or prosperity in a country.
Average house prices
in Europe 2021
The positioning of Switzerland in terms of homeownership can possibly be explained by a significant factor: average house prices. It is presumed that Switzerland has higher average prices per square meter compared to most other European countries. In fact, the average price in Switzerland exceeds 7000 CHF per square meter, which is over 1.6 times higher than the second most expensive country, Norway.
One factor influencing house prices is Switzerland's overall economic strength. The country has a stable and prosperous economy, leading to a high-income level and purchasing power.
It is important to note that house prices depend not only on the buyers' financial situation but also on various other factors such as location, size, and condition of the properties. Nonetheless, the high average house price in Switzerland remains a notable aspect that requires further research and analysis to better understand its impact on the real estate market and housing situation.
The price of buying a house is higher than ever
and its increasing at a faster rate than rental prices
Real Estate Prices in Switzerland reach all-time highs, with prices for buying properties rising at a faster pace than rental prices. The already exorbitant cost of homeownership in Switzerland continues to increase, as evidenced by data containing the average price increase per square meter since 2020 (01-01-2020 = 100%).
While rental prices have experienced a modest increase of 5.2%, condominiums and houses have seen a significant rise of approximately 19% since 2020. This indicates that the cost of condominiums and houses is outpacing that of rental apartments. The impact of the COVID-19 pandemic has further exacerbated this trend.
Proportion of single family homes
with a regional aspect 2021
When examining the regional aspect, several interesting observations can be made: The cantons of Central Switzerland all show a lower proportion of single family homes (below 50%) while the cantons of Eastern Switzerland show the exact opposite.
Especially the cantons of Eastern Switzerland are known to have a more rural orientation with a focus on agriculture and livestock farming. Cities and villages in these regions are relatively small and less densely populated. This results in lower demand for housing and potentially more affordable land prices compared to other cantons.
Further, cantons like Zug (ZG) benefit from lower tax burdens, which can lead to a more expensive housing prices.
Construction costs
across different regions of Switzerland
Another factor is the costs of building a house. The visualisation presents the cost variations of different types of construction work across the regions compared to the Swiss average. It can be observed that certain categories, such as windows, exhibit similar cost points across all regions. However, significant differences can be observed in categories like sealings, flooring, and carpentry work.
Of particular interest is the fact that the Eastern Switzerland region generally has lower costs in many categories, while building in the Lake Geneva region is evidently more expensive. A more comprehensive investigation of these regional disparities in building costs requires further research and analysis to better understand potential reasons and implications.
Analysis of tax data
in various regions of Switzerland
The visualisation glimpse into the income tax, profit tax, and wealth tax rates in various regions of Switzerland. These taxes play a vital role in shaping regional fiscal policies and revenue generation.
Income tax rates vary across the regions, with the Lake Geneva Region having the highest rate at 40.92% and Central Switzerland having the lowest at 25.52%. Profit tax rates range from 13.46% in Eastern Switzerland to 19.65% in Zurich. Wealth tax rates also differ, with the Lake Geneva Region imposing the highest rate at 8.1% and Central Switzerland having the lowest at 2.07%.
These variations in tax rates reflect regional fiscal strategies and priorities. Higher tax rates can generate additional revenue for public services, while lower tax rates may attract businesses and promote economic growth. Understanding these tax rates provides insights into the tax landscape and its impact on regional economies in Switzerland.
Relevant Taxes for purchasing property
Land Registry/Transfer Tax
When purchasing a property, stamp duty is levied depending on the regulations of the respective region, occasionally also by the municipalities. Where the tax is levied by the region, the municipalities are often involved in the tax revenue or can impose (limited) surcharges to the region tax. In certain regions, the municipalities have the authority, but not the obligation, to levy a stamp duty («optional» municipal tax).Note: Stamp duty is levied in addition to the land registry fees, which are subject to the principles of equivalence and cost recovery. Specifically, the regions have the following provisions. The amount is usually around 1 to 3 percent of the purchase price. The responsibility for payment can lie with either the seller or the buyer. Property/Real Estate Tax
Property tax is levied in about half of the regions. It is usually around 2 to 3 per mil of the estimated property value. The owners or co-owners according to the land register are liable to pay the tax. Wealth Tax Wealth tax is levied on the value of real estate and land. It applies in all Swiss regions and municipalities. The calculation is based on the taxable value of the property, and the exact calculation method may vary depending on the region. Mortgage debts can be deducted from the wealth value. Income Tax For owner-occupied properties, income tax is relevant. The imputed rental value is added to the taxable income. However, deductions for mortgage interest, maintenance expenses, and contributions to the 3rd pillar can be made to reduce the taxable income. Tax Reducing Factors and Deductions
Maintenance The costs for maintaining a property can be claimed as tax deductions. This includes repairs, renovations, and maintenance work. It is important to keep receipts and invoices for these expenses in order to submit them with the tax return. Insurance Premiums Certain insurance premiums such as building insurance, glass insurance, water damage insurance, fire insurance, and liability insurance are tax-deductible. Imputed Rental Value For owner-occupied residential property, the imputed rental value is taken into account. This value is usually about 60 to 70 percent of the rental value of a comparable property. The imputed rental value is considered as income and is subject to taxation. However, mortgage interest and maintenance costs can be deducted from this value, which has a tax-reducing effect. The imputed rental value of a self-occupied property can be reduced, for example, when a child moves out. It should be noted that the previously occupied rooms must actually remain vacant in order to claim the lower imputed rental value. Amortisation As a mortgage borrower, there is the possibility to make contributions to the 3rd pillar, which are tax-deductible up to an annual maximum amount. This can be particularly beneficial for owner-occupied residential property. Recap
Interestingly, Switzerland has a relatively low homeownership rate compared to other European countries, despite the country's financial strength. This is primarily due to a combination of factors. Firstly, high property prices make it challenging for many individuals to afford buying a home. The country's strong economy and high purchasing power contribute to the demand for high-quality properties, driving prices even higher. This, in turn, discourages potential buyers and leads to a higher proportion of renters in the Swiss population.
Moreover, Switzerland's complex tax system and stringent building regulations play a role in the low homeownership rate. The tax system can be convoluted, making it difficult for individuals to navigate the financial aspects of homeownership. The strict building regulations may create barriers to constructing or renovating properties, limiting the supply of affordable housing options.
Renting is often seen as more flexible and less burdensome, allowing individuals to avoid the financial commitment and responsibilities associated with homeownership. Renters in Switzerland also benefit from good legal protections and have access to high-quality rental properties. Thus, there is a cultural preference for renting in Switzerland.
Due to the importance of understanding the dynamics of the Swiss real estate market and the factors driving the low homeownership rate, policymakers and researchers recognize the need for further analysis and research. By examining elements such as high property prices, complex taxes, stringent building regulations, and cultural preferences for renting, a comprehensive understanding can be achieved. This knowledge will aid in formulating effective policies and strategies to address the challenges associated with homeownership in Switzerland.
References
Source Code 
Data Report 
Personas 
FullPage.js 
Apexcharts.js 
Quarto 
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