With the Swiss National Bank’s interest rate cut to 0% in summer 2025, financing conditions will return to historic lows. Buyers will benefit, as will institutional investors who are shifting capital into investment properties. As a result, prices are rising again, especially for apartment buildings.
At the same time, the falling reference interest rate is leading to rent reductions for old contracts. However, demand clearly exceeds supply. This is pushing the rental housing market further towards scarcity.
Ownership wins, preservation loses
The abolition of the imputed rental value is changing the ownership landscape. Without the tax burden, interest in buying is increasing, especially in the middle income bracket. However, the abolition of the flat-rate maintenance deduction curbs investment in building maintenance. Some cantons are already examining alternative taxes to compensate for the loss of revenue. The reform decision therefore has a double effect. It stimulates the market, but harbors risks for the building fabric.
Construction activity collapses
Construction output fell sharply in 2025. In Zurich by around 35 %, in Ticino by as much as 80 %. This is due to political uncertainties, rising construction costs and complex approval procedures. This has a direct impact on rental prices, which continue to rise in many regions.
The result is a structural shortage that will persist in 2026. Even a slight drop in immigration figures will do little to change this. SIV members in particular see the shortage as the main price driver of the year.
Politics as a game changer
Cantons and cities are experimenting with changes to building laws, from car-free districts to stricter regulations on the disclosure of pre-rentals. For project developers, this means more uncertainty, longer procedures and increasing risks.
Investors are becoming more selective and the choice of location is gaining in importance. The market is becoming increasingly fragmented along local lines.
Climate risks and new valuation standards
FINMA Circular 2026/1 makes sustainability mandatory. Banks and insurers must explicitly include climate and natural hazards in their risk assessments.
Exposed locations are becoming less attractive, while stable and climate-resilient properties are gaining. For institutional investors, this means rethinking valuation models and portfolios.
Residential properties on the rise, commercial properties under pressure
The SIV analysis shows a clearly divided market picture. The residential market remains robust despite the turnaround in interest rates. Demand is high, vacancy rates are continuing to fall and should soon drop below 1.2 %. Rent increases are realistic, particularly for new lettings. The pressure on the market remains.
In contrast, the commercial sector is under increasing pressure. Numerous companies are selling office space, resulting in a slight increase in vacancy rates. Modern, ESG-compliant new buildings are holding their own, while older properties are becoming less attractive and price concessions are becoming necessary.
The retail sector is also showing a mixed picture. Local supply remains stable, but fashion and electronics stores are struggling with declining footfall and falling profitability.
In terms of mortgages, owners are benefiting from low interest rates. Overall, financing costs are falling significantly. At the same time, energy and maintenance costs are rising and thus remain a fixed cost driver.
Despite political and economic uncertainties, the majority of SIV members expect rising prices and stable income in the residential segment and a further decline in construction activity.
Differentiation as a key factor
The market will remain robust but selective in 2026. Quality, location and climate fitness determine success. While residential is considered a safe asset class, commercial is becoming a challenge. Investors and owners are faced with the task of reading market environments more precisely and incorporating regulatory dynamics at an early stage.
