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The population of Switzerland is growing, and by the end of September 2022, there were already 8,935,000 inhabitants living in the country. And according to recent growth rate trends, it is estimated that over 9 million people will soon be living in Switzerland.

This should be good news for the Swiss construction sector, as an increase in arrivals should signal a comparable increase in the building of new homes.

However, the situation in Switzerland is more complex, and several factors are currently affecting the construction of new homes:

  • Financial Investors always consider the yield of return from their investment. And as the value of real estate in Switzerland rises, this is affecting the percentage return of the investment – making other investments relatively more attractive.
    • High real estate prices mean that the percentage of rental income to home value is low. A recent analysis of 10’000 apartments found that average rental yield before expenses stood at just over 3%.
    • Rising interest rates, are making other investments such as bonds potentially more attractive.
  • Higher mortgage rates are also affecting the number of investors entering the property market. 10-year interest rates in Switzerland have now reached 3% – up from 1% previously.
  • One further consideration for investors is the scarcity and high price of land coupled with building restrictions which in turn affect supply.
  • All this is having the effect that investors are turning away from real estate in Switzerland and starting to invest in other assets.



On the flip side of this situation, is the fact that as the number of people arriving into Switzerland continues to grow, this is driving up demand for living accommodation. And in 2022 alone, the population grew by over 100’000. And according to recent government data, at the end of December 2022, there were 2.24 million foreigners now living permanently in Switzerland.

In times of inflation and hardship for many, in order to incentivise the volume of home construction required to provide housing for Switzerland’s growing population, ironically – higher rents would be required. This would have the effect of encouraging higher yields and hopefully more investment. Fewer building restrictions and more land available to build would also be helpful.

Initiatives proposed by some politicians to cap rents, could have the opposite effect, with low percentage yields scaring investors away meaning less investment in construction and ultimately fewer new homes being built.

The picture in the rest of Europe varies from country to country. Some recent statistics indicate the following with regard to new home starts per thousand inhabitants in 2021:

  • At the top of the success ladder is Austria which recorded 10.56 homes built for every 1’000 citizens.
  • Poland 7.28 per 1’000 citizens.
  • Slovania 6.06 per 1’000 citizens.
  • Ireland 6.05 per 1’000 citizens.
  • Mid table is Czech Republic with 4.28  per 1’000 citizens (around 18% inflation in 2022 and interest rates @ 6% in 2023).
  • UK is at the lower end of the table with 2.56 homes built for every 1’000 citizens.
  • Italy at the bottom with 1.03 homes built for every 1’000 citizens

Switzerland with 26 cantons and 4 language areas presents a fragmented picture. Tourism areas see higher new construction rates than other non-tourism towns. One town that has both tourism and local inhabitants is the spa town of Baden – which has a population of around 20’000 with about 26% of the population being resident foreign nationals. One of the recent recordings of the rate of construction of new housing units per 1000 residents in Baden showed this as 5.25 per 1’000 residents.


Summary: High inflation rates across Europe in 2022 has lead to interest rates rising and made mortgages more expensive. This in part also means a  slow down in the construction of new homes as private investors struggle to be able to afford proposed increased mortgage payments.

In Switzerland the housing shortage situation is in part driven by increased interest rates, although compared to the rest of Europe both inflation and interest rates in Switzerland are low. The main driver for the slow down in the construction of new homes, is the percentage return for investors which stands at around, only 3%. This is making other asset investments more attractive. Government initiatives are also pointing towards a capping of rental prices, which in effect would continue to make the sector unattractive for investors.  And with increased numbers of people arriving in Switzerland, something will have to give, otherwise many new arrivals in Switzerland could soon struggle to find a home to live in.


Accurity is SECO licensed with a 20+ year enviable reputation as a trustworthy, reliable and transparent partner for companies of all sizes including SMEs, contractors and recruitment agents. We also work with cross border workers living in France and working in Switzerland  – as well as those living in Switzerland and working remotely for foreign companies. Our core services include Employer of Record or EOR for contractors and international and domestic clients wishing to engage contractors. Our pricing system is fair and transparent. We are based in Switzerland and have excellent local knowledge and connections. Contact our team to see how we can help you.