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With an average price per square metre exceeding CHF 10,000 in urban areas, is buying a house or apartment still worthwhile? Three key factors can help you decide:

  • The one-third of gross income rule still applies, based on a theoretical interest rate of 5%, plus 1% for maintenance and ancillary costs and the mandatory amortisation of the second mortgage;
  • The abolition of the imputed rental value in 2029 will put an end to the taxation of notional income, but will also eliminate deductions for mortgage interest and standard maintenance costs;
  • Given the acquisition and notary costs (often between 2% and 5%, depending on the canton), a property generally needs to be held for at least 8 to 10 years before buying becomes financially more advantageous than renting an equivalent property.


Buying or renting in Switzerland: which option should you choose based on your budget?

Equity requirements for financing a property

As a reminder, banks require a minimum of 20% equity of the purchase price (i.e. CHF 200,000 for a property costing CHF 1,000,000). This equity contribution is subject to strict rules:

  • At least 10% in “hard” equity: liquid savings, bank deposits, gifts or third-pillar assets.
  • A maximum of 10% from occupational pension assets: withdrawal or pledging of second-pillar assets (BVG/LPP).

Good to know: An early withdrawal from your second pillar immediately reduces your retirement benefits and may also reduce your coverage in the event of death or disability. Pledging your pension assets is an alternative that allows you to preserve these social security benefits.


Affordability calculation: the challenge of the theoretical interest rate

Lenders do not assess your application on the basis of current market interest rates (often between 1.5% and 2.5%). Instead, they apply a conservative calculation:

  • a theoretical interest rate of 5% on the total mortgage debt;
  • 1% of the property’s value for maintenance and ancillary costs;
  • mandatory amortisation of the second mortgage, reducing the mortgage to 66.7% of the property’s value within a maximum of 15 years.

For the mortgage to be approved, the total of these three cost items must not exceed 33% of the household’s annual gross income. Therefore, for a property worth CHF 1 million financed with a CHF 800,000 mortgage, the bank requires a minimum annual income of approximately CHF 180,000, even if the actual monthly costs are significantly lower.


Abolition of the imputed rental value: what impact will it have on your property purchase?

Although the reform is expected to come into force in 2029, the reform of the imputed rental value system is already influencing the decisions of many prospective buyers who want to anticipate the future rules.


How the imputed rental value works and current tax deductions

Today, homeowners who live in their own property are taxed on its imputed rental value, i.e. notional income corresponding to the rent they could theoretically receive if they rented out the property.

In return, several tax deductions are currently available, including:

  • mortgage interest;
  • certain maintenance costs;
  • various types of work aimed at preserving the property’s value, depending on cantonal regulations.

This system has been criticised for many years, particularly because it requires homeowners to pay tax on income they do not actually receive.


Financial comparison: rental costs versus homeownership costs

Owning a property involves several recurring expenses that need to be included when assessing its overall financial viability.


Calculating the actual costs of homeownership

The cost of owning a property is not limited to mortgage interest. Homeowners must also budget for several other expenses:

Expense item What it covers Impact on your budget
Mortgage interest Cost of borrowing the money Varies depending on the mortgage term and negotiated interest rate
Amortisation (second mortgage) Mandatory repayment within 15 years (to reduce the mortgage debt to 66.7%) Mandatory expense, but also builds equity
Running & maintenance costs Insurance, heating, condominium renovation fund Around 1% of the property’s value per year

For example, an apartment purchased for CHF 1 million requires sufficient financial affordability to cover not only the mortgage financing but also the property’s long-term maintenance costs.


The flexibility of renting in the face of changing interest rates

Renting retains one major advantage: flexibility. Tenants can more easily move to another property in response to changes in their professional, family or geographical circumstances.

Homeowners, on the other hand, benefit from greater residential stability but also assume greater financial risks. When a mortgage is renewed, an increase in interest rates can lead to a significant rise in monthly costs.

The choice between renting and buying therefore also depends on your willingness and ability to tie up capital in a property over the long term. Buying generally means keeping the property long enough to offset the costs associated with the purchase:

  • notary fees;
  • property transfer taxes, depending on the canton;
  • any financing-related costs;
  • resale costs in the event of a rapid change in circumstances.

A household planning to move within a few years will often benefit from carefully comparing these costs with the cost of renting. Conversely, a stable long-term housing plan increases the likelihood that buying a property will prove financially worthwhile.


When does buying property remain a good investment in Switzerland?

The question is not only whether the property market will continue to grow, but also whether the purchase aligns with the buyer’s financial and personal goals.


The ideal ownership period to offset notary and acquisition costs

It is generally considered that a property should be held for at least around 8 to 10 years in order to offset the costs associated with the purchase.

This period makes it possible to spread the following costs and risks over time:

  • acquisition costs;
  • any renovation work carried out after the purchase;
  • temporary fluctuations in the property market.

Profitability also depends heavily on the canton and municipality. For example, an apartment located in an area where housing demand remains high will not necessarily perform in the same way as a property in a region where prices are rising only slowly.

The location, quality of the property and the relationship between the purchase price and the property’s actual value therefore remain key factors.


Building wealth through mortgage amortisation

As borrowers repay part of their mortgage, they increase their equity in the property. Buying a property may be particularly suitable for:

  • households with a stable professional situation and regular income;
  • buyers who intend to remain in the same region for the long term;
  • people looking to convert part of their housing expenses into property equity;
  • investors who are able to accurately assess the expected return on a rental property.

However, buying solely in the hope of a rapid increase in property prices involves greater risks. The profitability of Swiss real estate primarily depends on a long-term strategy, sound financing and a realistic assessment of the associated costs.


FAQ

Is buying property in Switzerland a good investment in 2026?

Yes, provided you have solid financing and hold the property for a sufficiently long period. Profitability mainly depends on the purchase price, ongoing costs, mortgage interest rates and developments in the local property market.

How much equity do you need to buy a property in Switzerland?

Banks generally require 20% equity, of which at least 10% must come from sources other than second-pillar pension assets. The financing can be supplemented with personal savings or third-pillar assets.

Will the abolition of the imputed rental value change the benefits of buying property?

Scheduled for 2029, the abolition of the imputed rental value will change the taxation of homeowners. It is likely to benefit households with low levels of mortgage debt, but will also reduce some of the current tax advantages associated with mortgage interest and property maintenance costs.