Real estate market The impact of coronavirus on the real estate market

The Swiss real estate market will gradually return to normal in 2021 but the trend of working from home could affect prices.

by Matthias Holzhey and Maciej Skoczek 18 Mar 2021

Residential property prices are on the rise

Prices of Swiss condominiums and single-family homes have risen by an average of around 3 percent in the past year, in particular due to continued high demand for the latter. However, there are clear regional differences. Prices have surged particularly in urban agglomerations such as Zurich, Geneva, Zug and Lucerne. And in the main mountain locations, they have not increased so rapidly since 2012. By contrast, the real estate market in the canton of Ticino continues to be weak.

Working from home has been a game-changer

Working from home is becoming increasingly normal; we expect the number of people doing so regularly to double over the next five years. For many workers, this increases the need for an additional room at home. However, it can be difficult to find affordable additional living space in densely populated areas.

Working from home is also weakening the link between where people live and where they work. While demand for housing will be spread more evenly between different regions as a result, competition between locations will also increase. Greater freedom of choice in where to live opens up significant opportunities for regions that used to be outside the traditional commuter zones. The Lower Valais, the Chur Rhine Valley and the Lake Constance region are most likely to benefit, as these are popular areas with relatively low overall housing costs.

The boom in urban agglomerations is leveling off

One man’s joy is another man’s sorrow: The commuter belts around more densely populated urban areas, where demand for housing is disproportionately high due to the proximity to city center offices, are likely to become less attractive. Although living in big cities is likely to remain popular, the impact of greater freedom of choice in where to live will be tangible – albeit less so than in the exurbs. Relatively little will change in more remote regions. This also applies to Ticino, despite the Gotthard Base Tunnel.

Working from home will make longer commutes more feasible

The map shows municipalities where working from home has made workplaces more easily accessible on average. The level of potential additional demand is determined by the following indicators: local price level, level of income taxes, population growth since 2015, proportion of commuters and proportion of second homes. This information is shown at municipal level.


Real estate prices are expected to continue to rise this year, but at a slightly slower rate than in 2020. The impact of low mortgage rates is lessening and household incomes are likely to be under pressure this year, despite the economic recovery. Most people still find the idea of owning their own home attractive, including as a long-term investment. However, supply remains limited.

Price change for rental apartments

At the end of 2020, around 3 percent of rental apartments were empty with the logical consequence that rents were lower than the previous year by around 2 percent. The recession caused by the pandemic will also impact demand.

In urban centers and agglomerations, demand for housing remains high, as does new construction activity. These strong market conditions are reflected in the rents, which are 40 percent higher than in the rest of Switzerland. However, it can be assumed that this price differential will narrow in the coming years. The trend towards working from home and the extra living space that this requires will also make a difference here. After all, someone willing to add an extra 20 minutes to their commute can now afford an extra room for the same rent. It is therefore likely that demand for rental apartments in the extended conurbations will increase. By contrast, locations further afield are unlikely to benefit from this trend.

UBS Outlook Switzerland: forecasts for the 2021 economy

For an in-depth look at the economy, businesses, monetary policy and the real estate market, download UBS Outlook Switzerland.

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