Housing Market Becomes More Political - Housing Remains Scarce

Investment market: more politics, more competition, new priorities

The CSL investor survey 2025 shows a clear shift in the factors shaping portfolio decisions: interest rates remain central. Politics and regulation are increasingly influencing portfolio decisions, and competition for attractive properties is increasing. Sustainability criteria remain part of professional portfolio strategies, but are seen less as a central guiding criterion than in the previous year. It is also noticeable that AI and digitisation currently have hardly any influence on portfolios from an investor's perspective.

At the same time, commercial real estate is coming back into focus: prime office locations remain in demand, and commercial/industrial spaces are gaining importance as diversification. One driver is that the commercial market is currently subject to less strict regulation than the residential segment. In addition, the return and thus the interest rate spread on commercial properties is greater than on residential properties.

Housing market: Scarcity remains extreme in central areas

Scarcity remains the defining theme. Nationwide, the vacancy rate is at 1.0%, the lowest level in the last ten years. The pressure is particularly noticeable in central areas such as the city of Zurich with a 0.1% vacancy rate (235 apartments).

The excess demand is increasingly visible in Zurich's structure: the proportion of larger households is growing, which increases the demand for large rental apartments. Correspondingly, the discrepancy between supply and demand is particularly pronounced for 4.5-room apartments. This is exacerbated by the lock-in effect: since moving within central areas often involves significantly higher rents, many households move less frequently. As a result, large flats are more often (partly) under-occupied and come onto the market less frequently, which increases the pressure on 4.5-room apartments.

In the ownership market, the price level remains high. Prices have risen by about 20% in the last five years. At the same time, owner-occupancy rate continues to fall. A central driver is affordability: many households remain longer in the rental market because affordable ownership options are lacking. In addition, demand is noticeably more price-sensitive.

More supply in the office market: quality and location decide

In the office market, supply is increasing: in the agglomerations, the announced office space increased by almost 9% in 2025 to 3.17 million m². The development varies regionally. At the same time, demand remains strongly focused on modern, well-connected spaces. Peripheral and older properties are under greater pressure.

In addition to location and quality, two topics are coming to the fore: firstly, the impact of AI is likely to change space requirements in places in the medium term, with a time lag, because many leases are long-term. Secondly, repositioning and repurposing are gaining importance - for example, in the form of business apartments. The pressure in the housing market ensures that such offers are quickly taken up and "short living" increasingly becomes "long living".

Outlook 2026: robust but more selective

The investment market will continue to be fuelled by the current interest rate environment, political votes will increasingly influence the housing market, and commercial real estate will continue to gain in demand as a result. The rental housing market remains tight, rental rates continue to rise. The ownership market is losing regional momentum due to price increases and the resulting difficulties in affordability.

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