| RAMZI CHAMAT | OAKS GROUP SA
In an economic context marked by global uncertainty and major monetary adjustments, the Swiss real estate market continues to demonstrate remarkable resilience. The second quarter of 2025 marks a turning point, with sharp increases in both price and volume indicators. This renewed momentum raises questions about the sustainability of the recovery, medium-term outlooks, and opportunities to seize.
The Swiss real estate market appears to have regained a steady growth pace after several quarters of slowdown. In the second quarter of 2025, housing prices—both for apartments and single-family homes—recorded their sharpest increase in three years. In an environment of low interest rates, strong domestic demand, and a persistent housing shortage, market dynamics are shifting. The entire country is affected, with significant increases in urban centers, central cantons, and certain peripheral regions. This analysis provides an overview of key trends, the drivers behind the recovery, and the outlook for the rest of the year.
Apartment prices rose by 1.2%, and single-family home prices by 1.0%—the highest quarterly increases since 2022. This acceleration is driven by a combination of favorable factors: lower mortgage rates, controlled inflation, strong domestic demand, and structurally limited supply.
Major urban areas are leading the recovery. Zug, Lucerne, and Sion posted the highest increases for apartments (+2.4% in Zug and Lucerne, +2.0% in Sion), while house prices rose sharply in Sion (+2.3%), Lausanne, and Zug (+1.6%). Lugano stands out as an exception, with a simultaneous decline in apartment (–1.1%) and house prices (–0.8%). St. Gallen also recorded a slight decrease in house prices.
Over the past ten years, Zug remains the most dynamic city in the Swiss market, with apartment prices up more than 70%, followed by Zurich (+47.5%). At the cantonal level, apartments are once again outperforming houses. The strongest increases were recorded in Uri (+3.0%), Zug (+2.5%), and Obwalden (+2.2%). For houses, the most notable increases occurred in Valais (+1.8%), Zug and Obwalden (+1.6%), and Fribourg (+1.5%).
Transactions have continued to recover, confirming the momentum seen at the start of the year. The market now seems on track to reach—or even surpass—the average of the past ten years. This trend is largely driven by the continued improvement in financing conditions. Fixed 10-year rates are now below 1.5%, and variable rates indexed to SARON are hovering around 0.7%.
In this context, many buyers are eager to secure their purchase before prices rise further. The simultaneous acceleration of prices and volumes reinforces this sense of urgency, particularly in regions where supply remains extremely limited. While stricter credit requirements under Basel III have tightened lending conditions, their impact remains limited compared to falling interest rates and improving overall confidence.
However, the structural imbalance between supply and demand continues to weigh on the market. The vacancy rate has reached a historic low, and the number of building permits issued dropped by 13% year-on-year in Q2 2025. Despite a possible recovery in construction activity in the second half of the year, the annual housing shortfall remains estimated at nearly 50,000 units—a key driver of rising prices.
Since the end of Q1, the Swiss National Bank has lowered its key rate to 0%—a move prompted by very low inflation (0.3%) and a historically strong Swiss franc (1.25 USD for 1 CHF). This more accommodative monetary stance has further lowered mortgage rates and restored household confidence.
At the same time, global monetary trends are directly impacting the Swiss market. In the U.S., the adoption of the “Big Beautiful Bill”—combining tax cuts, public investment, and social support—has fueled expectations of a looser monetary policy. This dynamic has led to a global decline in bond yields, exerting downward pressure on Swiss interest rates. In this context, markets are increasingly anticipating a possible return to negative rates in Switzerland—a scenario that was unthinkable just a few months ago.
For Swiss households, this environment increases the appeal of buying property, which is often more advantageous than renting. For foreign buyers, the strength of the franc makes acquisitions more expensive, but Switzerland’s political stability, legal security, and favorable tax regime continue to make it a top destination for long-term investment.
The second quarter of 2025 confirms the return of a more robust growth phase for residential real estate in Switzerland. Simultaneous increases in prices and volumes, improved financing conditions, and ongoing supply pressure all point toward a sustained recovery, underpinned by solid fundamentals. In this context, sellers benefit from a favorable environment, while buyers are looking to secure their purchase before another price increase. While rate movements and international dynamics must be monitored, the outlook for the second half of 2025 remains positive, with a revised price growth forecast of 4%.
The coming months will be decisive, with four key indicators warranting close attention: decisions by the SNB, the direction of the U.S. Federal Reserve, the evolution of long-term rates, and the level of activity in the construction sector. In light of strong demand and continued supply constraints, the Swiss real estate market appears firmly set on an upward trajectory.
Source: RealAdvisors
