Real Estate in Switzerland, 2023

Inflation is slowly starting to develop in Switzerland:

The SNB has just raised its interest rate to 1.5%.

What do you think, where will it stop?
What effect will it have on property prices?

Real estate prices have been going up for 23 years now, and especially strong in the last 3 years:

Do you think a repeat of the 1990-2000 decade is likely?
Or at least a return to the 2020 levels?


I was told by the banks that the expectation is to reach 1.75% in June and then stay flat, perhaps go down again sometime in 2024.

My thoughts:

  • SNB will increase the interest rate to 1.75% in June and 2.00% in September, marking the peak. Inflation will decrease again and they‘ll slowly start decreasing the interest rate again in 2024.
  • Effect on real estate prices: only on rental objects (especially bigger ones). Classic houses and apartments will keep increasing in price, just not as fast as before. Demand is still huge and supply basically non-existent. No construction land and high immigration of high earners.

More interesting data points (black is OECD average):

I wouldn’t put much faith in that. Probably the SNB itself is reactive, they probably follow the guide of “let’s see if this stops inflation”. I think we’re all just guessing, including the guys&girls at the top.

So sad. I just can’t force myself to buy when the main motivation is FOMO and “hurry up, it won’t ever be as cheap as now”. And not only are prices high, but the mortgage rates are also higher, close to 2.5-3.0% at the point of writing. Where’s my 1% fixed rate :smiling_face_with_tear:


90s were different. SNB increased the interest rate from 2% to 9% within 2 years. Apart from that there was still a high supply in construction land and built houses. So we are in a completely different situation today. It‘s extremely unlikely to repeat like that.

Luckily prices can‘t just increase forever. Your maximum buying price is ~6x your yearly gross salary (with 20% in own funds, up to ~8x if you have 33.3% own funds). Salaries increased by 20% in the last 20 years while real estate prices doubled at least. You can‘t sell a house if basically nobody is able to afford it.

I would say (from own experience) that less than 10% of couples interested in buying RE can‘t afford anything above 1.2 million.


Yeah, what stops me from buying is the thought that currently the annual rent is less than 3% of the property price. This means there is almost zero risk premium for buying this asset. Compare that to the stock market, where you expect at least 10-12% annual yield on your investment.

This situation can only be facilitated by cheap credit. If you had to lay out your hard earned cash, nobody would pay CHF 2’000’000 to then wait 30 years until this purchase paid itself off.

I actually ran the math for my gf. I assumed a generous 120k gross income and with maxxed out tragbarkeit she would get close to 5x that in loan, so 600k. Additionally she has 600k in savings/inheritance. But even 1.2m does not buy you anything nice, that we would like to move into.

Other thing that I want to rant about: why are rent prices so low? A friend of mine has taken over an attractive flat with a monthly rent of CHF 2’600. The previous renter published the ad online and he got 200 replies in one day! In the end he chose my friend, because he was recommended by a common friend. So Vitamin B wins, not the market price!

Why do the pension funds and other real estate owners not put the price to the fair level, so that the supply and demand are in balance? They are missing out on free money. I don’t get it.

Aren’t rents also projected to go up, with the referenzzinsatz finally starting to also move up?

Is supply really non-existent? I have seen plenty of huge buildings appear over the last years in Zurich.

The high immigration rate of high earners might not continue forever.

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7 posts were merged into an existing topic: Longterm investment returns in various markets

You are probably the only one complaining about it :joy:

Very funny. If I’m the only one complaining then I guess the rest just doesn’t understand :wink: . Do you prefer to send countless applications over many months in the hope of being selected, or would you rather know that if you apply, there is 50% chance you will get it? When I go to a shop, I’d rather it be fully stocked and I don’t have to be friends with the cashier to be able to buy groceries.


would this come at the price of many not being able to afford rent?

Considering that lodging can easily cost 20-30% of the household income, it is funny to read it in a forum where people discuss which supermarket is cheaper and if it is worth to go abroad to buy groceries. I have no problem “overpaying” like 100 CHF per month by going to the nearest Migros to buy food instead of hunting for the cheapest groceries. But I also think that 95% of households cannot afford just take any lodging that suits them no matter the price.

If you want to rent twice more expensive than market prices, I am sure you can find something very easy. Or live permanently in a hotel/pension/Airbnb. If I would have lots of money and no children, I might have actually considered this.

ok I agree

Last time I checked, in the long run the S&P 500 yielded 10% nominal return in USD and SPI yielded 8% nominal in CHF. Adjusted for inflation, both would probably sit close to 7% real return. But ok, maybe if you count the net, after tax income, then it goes down.

But let’s not get sidelined by this one number.

What I think we can agree on, is that over the last 50-70 years, our productivity has grown, but our purchasing power of real estate has shrunk. Yes, it is possible to get a mortgage at the low interest rate not seen in the past, but still, you have to carry this burden of owing many times your annual savings and eventually pay it off. It just seems broken to me and I wonder what exactly causes it and where’s the fix.

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If rental ads disappear after a couple of days due to high demand, then I don’t think these people are at the limit of what they can afford. If there’s a flat going for 2’500, maybe I would be willing to pay 3’000 for it. But I don’t even get the chance to bid. Is that not obvious? If hundreds of people apply in a day, it’s a clear sign that the price is too low.


Let’s not talk about your feelings but about the observable facts. Applying for a flat in Switzerland (at least in the Zurich area) is difficult. Most of the time you don’t get a reply. Hundreds of people are willing to pay the price that is advertised. So I wonder why this price isn’t higher. Just looking for a straight answer.

Because it’s a regulated market.

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Well, we’re getting somewhere. But can you point me to a source where I can read up on that? Like, how is a pension fund or an insurance company restricted in setting the rent height on the property that they own?

Aren’t these socialist policies slowing down further real estate development? If you can’t set the rent freely, maybe you will think twice before you invest.

I meant this one

But I agree, we should stop here.

Productivity has nothing to do with the real estate. There are more people on earth and, I don’t have numbers at hand, but from what I remember, the lodging area occupied per person keeps increasing and increasing.
(Did we have this discussion few years ago already?).
Even during the last 50 years or so; in 19th - early 20th century it was rather common in cities that a multigenerational family would occupy one room. So we can say that unlike all other resources, living space is getting less and less available. So you shouldn’t be surprised that our Lord the Market makes it expensive!

Of course there are areas with a huge demand and those with a moderate one. Even in Switzerland, you can buy or rent lodging at very affordable prices in small villages of Canton Jura. But that’s not what you are looking at.

That might be true, but the same property also costs more than it did in the past.

Just out of curiosity, did you see any attractive real estate there? I mean like, not very old, not in need of big renovation.

I think this is a subjective and political matter and discussion of these is not welcome in this forum. You are also oversimplifying here. Calling the policies socialist, seems judgemental.

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