Why Switzerland Has The Lowest Home Ownership Rates

Why Switzerland Has The Lowest Home Ownership Rates 

“I’ve lived for 10 years in Switzerland, so I speak German.”
– Martina Hingis


Why does Switzerland have one of the lowest rates of home ownership?  This seems unfathomable as the Swiss are ranked as the wealthiest country in the world per capita (per Wikipedia), yet have a home ownership rate of only 44%. The Swiss tend to have a high household savings rate compared to North Americans. According to several studies, retirements savings are woefully inadequate for most North Americans, and that people nearing retirement claim that their wealth is achieved solely through the equity in their home.  The mindset becomes one of selling your family home and using the equity to provide financially in the later years.  This is quite a different perspective compared to the Swiss.  They tend to have a very high rate of savings per household and seem to prepare for retirement during their working years more steadfastly than North Americans.  There is no social stigma attributed to renting, and real estate speculation in Switzerland have not seen the meteoric rise as in the US (nor the “housing bubble burst” in the late 2000’s).  Swiss profit from real estate is minimal and homes can sit on the market for years without an offer.


Swiss residents pay tax on their own homes, which is considered a “wealth tax” – even if they live there.  This taxation was actually struck down by the Supreme Court of the United States in 1934 and Britain dropped the tax in 1963. Geneva has the nation’s second lowest rate of home ownership in Switzerland at 17%, compared to Valais with 56%.  Valais is a much more rural area than Geneva, so this could explain the major difference in home ownership.

On average, it can take a year or more to sell a home in Switzerland since renting is still most common. There is also a lack of government subsidies to make ownership more appealing and often times you must have a minimum of 20% cash down payment in order to qualify for a mortgage.  Rental conditions, however, are regulated and the Swiss population seems to prefer the freedom of having increased mobility and not having a single asset represent their leveraged investments.  Interestingly enough, in a 1996 survey, the New York Times reported that a sample of the Swiss residents interviewed, 83% said they would prefer home ownership over renting!


Can foreigners own property in Switzerland?  What compelled me to write this article was that I had read that the Swiss government actively discourages foreign investment in real estate.  In fact, the Swiss government restricts the sale of second homes to foreigners and has an annual quota of only 1,500 permits.  Only properties in specific regions are available for purchase by foreigners, and must be located in a tourist resort.  This is in stark contrast to Canada’s open arms policy with foreign buyers encouraged to buy up real estate – with very few regulations or much scrutiny.  Vancouver has seen the dramatic affect that foreign investment has on real estate prices and immigration.


ONE MORE BIG DIFFERENCE between North American and Swiss home ownership is that the Swiss had a law in place that if your home does not include a bunker, or you are subject to an additional tax so the government can provide space for you in a communal bunker.  “Every inhabitant must have a protected place that can be reached quickly from his place of residence” and “apartment block owners are required to construct and fit out shelters in all new dwellings”, according to articles 45 and 46 of the Swiss Federal Law on Civil Protection. Enacted in 1963, most building constructed after this timeframe include a shelter/bunker.  If you own a bunker, you may use them for other purposes such as storage space, but are required to keep them in good order.  Interestingly, some of the public bunkers in recent years have served as temporary shelter for asylum seekers to the country.  It is estimated that Switzerland has built enough underground shelters to protect 114% of its entire population!


If you are interested in knowing the value of your home, please contact our McCullough team today at 250-751-1223 or email us at brian@mmshomes.com. We can even help you find your dream property if you want to build your own Swiss bunker here on Vancouver Island!


Brian McCullough, Myles McCullough & Kiel Lukaniuk



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