| RAMZI CHAMAT | OAKS GROUP SA
The Swiss real estate market, a pillar of the national economy, is evolving in the face of economic and regulatory challenges. Following a 2024 marked by the stabilization of financing costs and a moderate recovery in construction, 2025 promises to be a year of transition. With the gradual implementation of the construction law reform and Basel III regulations, as well as the introduction of legislation strengthening sellers’ liability, the sector will need to adapt to major transformations. This article explores recent dynamics and upcoming prospects.
The Swiss real estate market, renowned for its stability and attractiveness, remains a key pillar of the national economy. However, like any sector, it is sensitive to economic, social, and regulatory developments. After a 2023 marked by high interest rates and an increasing housing shortage, 2024 provided some relief through stabilized financing costs and a moderate recovery in construction activity.
As 2025 approaches, significant transformations loom, including the progressive implementation of the construction law reform and the full adoption of Basel III regulations. Additionally, legislation aimed at strengthening seller liability is expected to come into force in the second half of 2025 or early 2026, reshaping contractual frameworks in the sector. This article analyzes the major developments of 2024 and offers detailed projections for 2025, highlighting the opportunities and challenges facing the Swiss real estate market.
In 2024, the Swiss economy demonstrated resilience despite global headwinds. The Swiss National Bank (SNB) adopted a more accommodative monetary policy, lowering its key interest rate to 0.5%. This decision, driven by controlled inflation and signs of economic slowdown, aimed to stimulate economic activity, particularly in the real estate sector.
The rate reduction stabilized mortgage costs after sharp increases in 2022 and 2023. As a result, Swiss households showed renewed interest in acquiring real estate, although economic uncertainties tempered purchasing decisions in the higher-end and urban segments.
Mortgage rates decreased in 2024, reflecting the SNB’s adjustments. Ten-year fixed-rate mortgages, which had peaked in 2023, gradually dropped to an average of 1.8% over the year. This decline improved homeownership accessibility for many households, bolstering demand for residential properties.
Despite strong demand, property prices experienced more moderate growth in 2024 compared to previous years. With an average increase of 2.8%, the market showed signs of stabilization, albeit with regional disparities.
The rental market remained under significant pressure in 2024. Rents rose, particularly in major cities where vacancy rates remained exceptionally low, around 1.3%. While new rental units increased slightly, they were insufficient to meet demand. This situation fueled public debates on the need for affordable housing, particularly for young households and families.
Expected to take effect in the second half of 2025 or early 2026, this reform aims to transform real estate practices in Switzerland. Key highlights include:
This reform will likely raise construction costs but improve project quality and transparency. Project timelines may also lengthen due to additional compliance requirements, exacerbating short-term supply pressures.
With full implementation set for 2025, Basel III regulations will require banks to hold higher capital reserves. Implications for the real estate market include:
The SNB could lower its key rate by an additional 0.25% in 2025, providing even more favorable conditions for buyers and investors.
Legislation planned for 2026 will impose direct responsibility on sellers for hidden defects discovered post-transaction. While not yet in force, its influence is already shaping practices:
Real estate stakeholders will invest more in energy-efficient renovations and digital tools, including:
The Swiss real estate market faces a strategic crossroads in 2025, with changes poised to reshape its dynamics sustainably. Monetary adjustments initiated in 2024, including lower interest rates, have already ushered in a phase of stabilization and recovery. However, this pivotal year is characterized by extensive regulatory reforms, such as Basel III's implementation redefining mortgage credit access and the construction law reform, set for late 2025 or early 2026, aimed at enhancing quality and transparency in real estate projects.
While these measures are crucial for bolstering sector resilience and sustainability, they pose significant challenges. Construction costs are likely to rise, project timelines may lengthen, and homeownership will become more demanding for many households. Nevertheless, these reforms also present opportunities, particularly for institutional investors, innovative developers, and strategically positioned buyers.
Additionally, the ecological transition and digitalization provide levers to transform the sector. Eco-friendly buildings and digital tools continue to reshape consumer expectations and professional practices. Peripheral regions, fueled by remote work trends and improved infrastructure, emerge as promising growth areas.
Amid this evolving landscape, 2025 is not merely a year of challenges but a unique opportunity for market players to innovate, invest in sustainable solutions, and address the diverse needs of buyers and renters. While structural obstacles such as affordable housing shortages persist, concerted efforts by regulators, investors, and developers could pave the way for a more balanced and sustainable market.
The main factors include lower interest rates, new regulations such as the construction law reform, and increased capital requirements for banks under Basel III. Additionally, consistent demand in major cities continues to drive prices upward.
The new laws enhance transparency and project quality by imposing longer guarantees, stricter environmental standards, and more comprehensive technical documentation. This could lead to increased costs and longer timelines for new projects.
Yes, pressure on the rental market is expected to persist, particularly in major cities, due to strong demand and limited supply. Rental prices are likely to continue rising slightly.
With low interest rates and attractive rental yields, 2025 offers promising opportunities for investors, despite higher regulatory compliance costs.
Digitalization optimizes transactions, enhances the customer experience, and integrates artificial intelligence tools for more efficient management of properties and real estate projects.
