As Switzerland continues to grapple with an ongoing shortage of rental housing, the buyers' market has been a tale of two homes. While the cost of buying an apartment has continued to rise, prices for single-family homes have fallen.

House prices fall fastest in French-speaking Switzerland

According to the report, created by mortgage provider and comparison site MoneyPark, mixed developments have characterised the Swiss housing market so far this year. In the first six months of the year, the average price for a single-family home has fallen by 2,2 percent.

House prices have fallen fastest in French-speaking Switzerland, where the average cost has fallen by 4 percent. Homes in the Romandie are now roughly the same price that they were in mid-2022 - though they are still around 10 percent more expensive than they were in 2017.

Things were less rosy in German-speaking Switzerland, where prices have only fallen by 1,3 percent in the last six months. This has led to a widening price gap between the east and west sides of the Röstigraben, with houses in German-speaking areas now an average of 5 percent more expensive than those in western cantons.

Affordability still a problem on Swiss housing market

By contrast, the cost of apartments in Switzerland has risen by an average of 0,5 percent in the last six months. Though they are already significantly more expensive than those in the Romandie, apartments in German-speaking cantons saw prices rise the most, 0,6 percent compared to the 0,2 percent increase reported west of the language border.

Despite falling prices, the prospect of buying a house in Switzerland remains unaffordable for most. In April 2024, a study from UBS found that only 15 percent of the population has the salary or income available to afford a single-family home. The bank noted that 20 years ago, 60 percent of the population had the potential to purchase property.

Mortgages in Switzerland increasingly given by pension funds and insurers

At a time of fluctuating interest rates, it is likely not a surprise that demand for rate-tied Saron mortgages fell by 58 percent between January and July 2024. At the same time, demand for fixed-rate mortgages grew, representing 15 percent of all mortgages issued. Those in French-speaking areas were found to favour longer mortgages compared to the German-speaking Swiss.

When it came to who was offering mortgages, MoneyPark noted that insurance providers and pension funds are becoming an increasingly popular choice in Switzerland. In the first six months of the year, 51 percent of mortgages were issued by banks, followed by insurers (31 percent) and pension funds (18 percent). For context, at the end of 2022, banks issued three-quarters of all mortgages in Switzerland.

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