Property Market Switzerland 2025 | 1

Following solid development in the second quarter of 2024, the growth of real gross domestic product (GDP) in Switzerland has slowed. In the third quarter it recorded a quarter-on-quarter rise of just 0.2%. Among other things, declining exports and persistent challenges in the manufacturing sector proved a drag on growth. All in all, there are plenty of reasons to believe that although the Swiss economy should record stronger growth in 2025 than in 2024. However, with an expected increase of 1.4%, it would remain below the average of the last ten years (+1.8%).

The rate of inflation in Switzerland declined to +0.6% in December 2024, which is exactly the same as the ten-year average. Rising rents (+3.4%) were the most important price-driving factor, whereas goods imports had a deflationary effect. Over 2024 as a whole, inflation amounted to an average of 1.1%. Inflation can be expected to fall further in 2025, and at an estimated +0.3% would be only just above the lower end of the target bandwidth defined by the Swiss National Bank (SNB).

Last year, the Swiss National Bank (SNB) responded to the rapid decline in inflation, fairly weak economic momentum and the strength of the Swiss franc by lowering the key interest rate in four steps from 1.75% to 0.5% – the last step was taken in December with a reduction of 50 basis points. Despite this expansionary monetary policy, inflation is likely to be very low in 2025 too, and the economic recovery is now set to unfold more slowly than had been expected only recently. Given this backdrop, and in view of the likely further rate cuts by the ECB and the Fed, which will increase the upward pressure on the Swiss franc, a return to zero interest rates before the end of 2025 does not look unrealistic.