Rising prices and a tight rental market
The Zurich property market remains on course for growth, but while owners are benefiting, the situation for tenants continues to worsen. Residential property prices rose by 3.3% in 2024, while the shortage of rental flats intensified. Particularly noteworthy rents were increased not only for new lettings, but also for existing tenancies.
Zürcher Kantonalbank (ZKB) has published its annual market analysis and confirms the further rise in property prices. Following growth of 3.7% in 2023, prices rose by 3.3% in 2024. Even if the pace has slowed slightly, the trend remains clear: residential property prices in Zurich have risen 2.5-fold in 20 years.
It is interesting to note that despite lower interest rates, the expected stronger price increase failed to materialise. Demand was more subdued, particularly for new-build properties, which take longer to sell. Nevertheless, ZKB registered an increase in transactions in the second half of 2024, which indicates that demand is picking up again.
Increasing shortage on the rental flat market
The tense situation for rental flats continued in 2024. For the first time, the ZKB found that the number of sales advertisements was slightly higher than the number of rental offers – a sign of the continuing dwindling capacity on the Zurich rental market.
Although the shortage was not quite as drastic as feared, ZKB anticipates a further decline in vacancies in 2025.
Rents are also rising for existing tenants
Rents in Zurich rose by an average of 4.5% in 2024 – a significant increase compared to the Swiss average of 3.3%. It is particularly noteworthy that not only new lettings but also existing tenancies were affected by increases.
This trend is directly attributable to the reference interest rate increases from 2023, which had a delayed impact on rents. In the third quarter of 2024, existing rents in Zurich were 5.4 % higher than in the previous year, while they only rose by 3.3 % across Switzerland. The increase was even higher in the Lake Geneva region.
Institutional landlords utilised their scope for rent increases more intensively than private owners. However, there are signs of a trend reversal: as the reference interest rate will fall in March 2025, many tenants are likely to demand a reduction in their rent.
The Zurich property market therefore remains a dynamic field with rising prices for owners and increasing challenges for tenants.