Study warns of new price dynamics on the housing market
Rental price momentum on the Swiss residential property market is likely to pick up again after a relative lull due to a shortage of supply, high demand and rising construction costs. Nevertheless, construction activity remains low due to extensive regulations, according to a study by the Raiffeisen Group.
Price momentum on the Swiss residential property market has calmed since the beginning of 2024. According to the Raiffeisen Group ‘s “Real Estate Switzerland 2Q 2026” study, the reasons for this are lower immigration, lower interest rates and stable construction prices, as detailed in a press release.
According to the study, this relative lull could soon come to an end. The expiry of the rent-dampening effects of the lower reference interest rate and higher energy prices as a result of the war in Iran are currently causing construction prices to rise sharply. At the same time, residential construction activity in Switzerland remains at a historically low level.
One reason for this is the intensification of regulations in the areas of energy efficiency, climate and noise protection, accessibility and monument protection. The length of cantonal building laws has increased by an average of 26 per cent since 2005, while the length of building ordinances has even increased by 32 per cent. However, regulatory provisions are also increasing due to technical standards from private professional associations. According to the study, these are often declared legally binding and thus lead to longer authorisation procedures, higher planning risks and rising construction costs. The impact of these factors could soon lead to an end to the price stabilisation on the rental housing market, explains Raiffeisen.
“The multitude of new social and technical expectations of residential construction is mostly politically desired and broadly supported, and viewed in isolation, individual regulations appear to make perfect sense,” Fredy Hasenmaile, Chief Economist at Raiffeisen Switzerland, is quoted as saying. “Taken as a whole, however, they contribute to the complexity, risks and costs of residential construction increasing to such an extent that these effects can no longer be offset by technical progress and efficiency gains.”
The decision to abolish the imputed rental value has not yet had any tangible effects on the housing market. In order to realise potential tax savings in good time, Hasenmaile recommends renovating owner-occupied homes in need of refurbishment as soon as possible.