Switzerland Faces the Harshest Housing Shortage in Western Europe

Only about 36% of Swiss residents own their homes, a figure that has remained consistently low for decades, according to the Federal Statistical Office. The dream of homeownership is becoming increasingly out of reach, even for the middle class, as SWI reports. Meanwhile, the housing supply continues to shrink.

One striking example comes from a married couple in Zurich who wanted to buy a house for CHF 1.7 million (€1.8 million). The bank valued the property at CHF 1.49 million, but the seller—who had inherited the home—rejected the offer, calling it too low. The house was old and in need of major renovations. This case illustrates a broader trend: high demand and limited supply allow sellers to set inflated prices without fear of losing buyers.

Rising Property Prices and Stagnating Affordability

Between 2017 and 2024, real estate prices in Switzerland rose by an average of 30%. The situation is particularly severe in major cities. According to Real Advisor, home prices increased by 1.4% and apartment prices by 2.2% in the past year. The average home price now stands at CHF 1.3 million (€1.4 million), with 80% of listings falling between CHF 600,000 and 3.5 million (€630,000 – €3.7 million). One square meter costs an average of CHF 8,300 (€8,870). Rent for a house is approximately CHF 3,500 (€3,781) per month.

The average price of an apartment is approaching CHF 943,000 (over €1 million), with 80% of listings ranging from CHF 463,284 to CHF 2,302,753 (€492,000 – €2.3 million). The average cost per square meter is CHF 9,155 (€9,726). Monthly apartment rents hover around CHF 2,600 (€2,760), with a typical range between CHF 1,300 and 6,350 (€1,354 – €6,735).

Rent Relief Tied to Benchmark Rate Cut

Some renters may be eligible for rent reductions, as Switzerland’s national benchmark mortgage rate fell back to pre-inflationary levels. In March 2025, the rental reference rate dropped from 1.75% to 1.5%. By law, a 0.25-point cut allows tenants to request a 3% rent decrease. However, eligibility depends on lease agreement specifics.

Barriers to Homeownership

Buying a CHF 1 million (€1.07 million) apartment requires a minimum 20% down payment. The household income must exceed CHF 180,000 (€192,600) per year, while the median individual salary is only CHF 80,000–90,000 (€85,600 – €96,300). As a result, many young families and single earners are priced out of the market.

A Zürcher Kantonalbank study shows that the share of couples aged 30–40 who can afford a typical house in Zurich dropped from 13% in 2019 to 9% in 2024. This means nine out of ten families with children cannot afford a home even with steady income. Inheritance or parental support is often the only path to ownership—deepening wealth inequality. Prices are projected to rise another 4.5% in Zurich by 2025–2026.

Vacancy Rates at Record Lows

The national housing vacancy rate is just 1.08%, according to the Federal Statistical Office. In Zurich, the vacancy rate is a historic low of 0.07%—possibly the lowest in Western Europe. The OECD ranks Switzerland and Sweden among the worst for housing affordability. While Sweden has seen slight improvement, Switzerland’s situation is worsening.

Root Causes and Outlook
Key contributors to the shortage include population growth from immigration, restricted residential construction, and strict zoning laws. Switzerland's population grew by 83,000 in 2024, but housing construction lags behind demand. The outlook remains grim: further vacancy rate declines are expected, likely driving up rents and social tension in cities like Zurich, Geneva, and Lausanne.

Is a Housing Bubble Forming?
Despite strong buyer interest, the risk of a housing bubble is considered moderate. A sharp price correction would only occur with a major recession and rising unemployment, neither of which are currently present. With strict building regulations, limited land, and stable demand, price declines are unlikely in the near future.