Between October 2020 and April 2023, Swiss building construction costs rose by 13.9%. On an annualised basis the cost of building has been rising at a rate of 4.3% over this period, a rate higher than general inflation – the consumer price index rose 2.6% over the year to the end of April 2023.
Building costs rose 1% during the month of April 2023, compared to a general consumer price index rise of 0.2%.
The worst affected regions were north west Switzerland (+16.8%), central Switzerland (+14.4%) and Zurich (+14%). The Lake Geneva region (+13.4%), greater Bern (12.9%) and Ticino (11.5%) saw lower rises in building costs.
Higher construction costs and rising interest rates have combined to create a head wind for investment in home building in Switzerland. At the same time net migration continues to put pressure on those searching for a place to live. In addition, as households shrink in size the per capita demand for homes is increasing.
Overall, Switzerland has a home vacancy rate of 1.31% (2022). Many regions have rates of less than 1%. Switzerland, has one of the tightest housing markets in Europe. Only Iceland has a lower vacancy rate. Rates in France and Germany are around 8%, according to the OECD. Other tight housing markets include the UK (2.7% vacancy – 2019) and the Netherlands (4.3% – 2020).