Home Ownership Remains Affordable to Run, but Out of Reach to Buy
People who already own their homes often benefit from low ongoing financing costs. For new buyers, however, entering the market is difficult because purchase prices, equity requirements and affordability rules are the main obstacles.
Author: Nikita von Niederhäuser , UrbanHome real estate expert Updated on: · Reading time: approx. 10 minutes
What does “affordable to run but out of reach to buy” mean?
This phrase describes a common contradiction in the Swiss property market.
Someone who already owns a home and finances their mortgage at low rates may have lower ongoing housing costs than a comparable tenant.
This is especially true if the mortgage is secured over the long term and no major renovations are imminent.
New buyers face a different calculation. They must finance today's purchase price, provide enough equity, pass the bank's assessment and account for service charges, maintenance, amortisation, taxes and possible rate changes.
Home ownership may therefore seem inexpensive from month to month while remaining out of reach for many households. The purchase price relative to income is often the bigger hurdle.
1. Running costs: How much does the home cost once it has already been bought and financed?
2. Ability to buy: Are income and equity sufficient for the bank to finance the purchase?
Why does this contradiction arise?
The cost of running an owner-occupied home depends heavily on mortgage interest rates.
When market rates are low, effective financing costs fall. Owners may then have a relatively low monthly burden, especially compared with newly rented homes in tight markets.
However, banks do not assess affordability using only the current market rate.
They often apply an imputed interest rate well above the actual rate. Amortisation, maintenance and other ongoing costs are added.
A property may look inexpensive in the household's monthly budget yet still fail the bank's conservative affordability test.
High purchase prices are another entry barrier. Even if monthly costs after the purchase would be manageable, buyers must first provide sufficient equity.
The main barriers to buying property
A low mortgage rate alone does not make home ownership accessible.
Equity, affordability and the purchase price in the chosen region are especially important.
Equity
High property prices require substantial equity. With an equity share of around 20 percent, a CHF 1 million property requires approximately CHF 200,000 of equity.
Affordability
The bank calculates conservatively using an imputed interest rate, amortisation, maintenance and other ancillary costs.
Regional scarcity
In Zurich, Geneva, Zug, Lucerne, Basel and many mountain regions, high demand meets limited supply.
First-time buyers are particularly affected
The situation is especially difficult for first-time buyers, young families and households without existing property wealth.
They have not benefited from previous price increases but must pay today's market prices.
Existing owners, on the other hand, may be able to use equity built up through appreciation or a property sale for their next purchase.
Running costs versus buying hurdles
| Aspect | Why home ownership can seem affordable | Why buying remains difficult |
|---|---|---|
| Mortgage rate | Low market rates reduce ongoing financing costs. | Banks use imputed interest rates and assess long-term affordability. |
| Rent vs ownership | Owners pay no rent and may benefit from relatively stable housing costs. | Buyers must first finance the purchase price, equity and acquisition expenses. |
| Equity | Existing owners can use increases in property value as security. | First-time buyers often need years to save enough equity. |
| Maintenance | Regular minor maintenance costs can often be planned. | Renovations, refurbishments and renewal funds may generate major additional expenses. |
| Taxes | The tax effect depends on imputed rental value, debt, interest and maintenance. | The canton, debt level and reform from 2029 may change the calculation. |
| Region | Home ownership remains comparatively accessible in some regions. | In highly sought-after centres, prices frequently exceed many households' financing capacity. |
steps towards a realistic purchase decision
Calculate your maximum purchase price based on income, equity and the affordability assessment.
Do not calculate using only low market rates; include scenarios with imputed interest rates.
Separate your equity sources: liquid assets, pillar 3a, pension fund, reserves and acquisition costs.
Budget for maintenance, renovations, ancillary costs, insurance, taxes and renewal funds.
Compare the price with similar properties in the same municipality and, where possible, a similar micro-location.
Broaden your search region and consider whether another location makes more financial sense.
Clarify the financing limit and obtain a possible bank confirmation before viewings.
Only buy if the property remains affordable with higher rates or changing circumstances.
Is home ownership really within my reach?
These questions help you assess the difference between affordable running costs and the ability to buy a property.
Home ownership assessment questions for Switzerland
1. What is my realistic maximum purchase price?
2. Is my equity sufficient for the purchase price,
acquisition costs and financial reserves?
3. Would financing remain affordable using
imputed mortgage interest rates?
4. How much will maintenance, renovations,
taxes and insurance cost?
5. Would the property still make sense without
further price increases?
6. How would affordability change with children,
part-time work or a change of job?
7. Will this location be easy to resell over time?
8. Are there hidden costs for condominium ownership,
renewal funds or major renovations?
9. How will the 2029 reform of imputed rental value
affect me?
10. Is renting financially more flexible than buying
in my situation?
Two typical situations
Family with a good income
A family earns a combined gross income of CHF 150,000 a year and finds a house for CHF 1.2 million.
At a low market interest rate, the monthly payments appear affordable. However, the bank's affordability calculation, using imputed interest, maintenance and amortisation, may show that the home is too expensive.
In addition, equity of approximately CHF 240,000 is needed at 20 percent, plus acquisition costs and reserves.
Apartment owned for ten years
Someone has owned an apartment for ten years. The mortgage is on favourable terms, and its market value has increased.
Their ongoing costs may be below the rent for a comparable home.
A first-time buyer would now have to purchase the same apartment at a higher price and secure substantially more difficult financing.
Realistically assess whether you can afford to buy a home
Maximum purchase price calculated realistically
Equity fully assessed
Acquisition costs checked
Financial reserves included
Affordability assessed conservatively
Maintenance budgeted
Renovations considered
Insurance budgeted
Tax implications checked
Higher interest rates simulated
Location assessed
Comparable prices checked
Resale potential assessed
Renovation requirements checked
Long-term use assessed
Renewal fund checked
Planned renovations reviewed
Owners' association minutes read
Ancillary costs checked
Regulations reviewed
Financing limit clarified
Bank confirmation obtained
Imputed rental value reform considered
No financing without reserves
Long-term affordability confirmed
Related UrbanHome guides
Real estate and finance: Guide for Switzerland
The essential principles of equity, mortgages and reliable financing for your home.
What is imputed rental value?
Learn how imputed rental value works and what it means for homeowners' taxes.
Imputed Rental Value Ends in 2029: Who Wins and Who Loses?
Find out which homeowners may benefit from the reform and who could face higher taxes.
Will a Renovation Wave Arrive Before 2029?
How tax changes could affect renovation decisions and what homeowners should consider.
Real estate agent commissions in Switzerland
Who pays the agent, how commission is agreed and which costs may arise when buying property.
Buying property: Guide for Switzerland
Everything you need to know about property searches, financing, purchase agreements and acquisition costs.
Frequently asked questions about home ownership and affordability
The key answers explained concisely.
Low mortgage rates can reduce monthly costs. Maintenance, ancillary costs, taxes and renovations must still be included.
Purchases often fail because of high property prices, insufficient equity, affordability rules and regional scarcity.
Around 20 percent equity is generally needed to buy owner-occupied housing. Acquisition costs and reserves must also be considered.
It means that imputed interest, amortisation, maintenance and other costs remain manageable in relation to income over the long term.
Ongoing costs of ownership can be lower, particularly when mortgage rates are low. Getting into the market is often more difficult because of prices, equity and long-term risks.
First-time buyers, young families, households without existing property wealth and buyers in expensive regions find it especially difficult.
Low market rates reduce actual monthly costs, but banks often use much higher imputed rates in their credit assessments.
Often it is the combination of high prices and insufficient equity. Affordable monthly payments are not enough if the required equity is missing.
Not automatically. The reform changes taxation but does not remove high prices, equity requirements or affordability checks.
Only if the price, income, equity, life plans, property and long-term affordability all fit together.
Build equity early, set realistic price limits, widen the search area, consider renovation costs and clarify financing with the bank in good time.
Compare more than mortgage interest and rent: include tied-up capital, maintenance, renovations, taxes, flexibility, acquisition expenses and resale risk.
Low running costs do not automatically make buying easy
In Switzerland, home ownership often remains attractive in terms of running costs for existing owners and buyers with sound financing.
Low mortgage rates can reduce monthly costs and make ownership appealing compared with renting.
The real bottleneck is entry into the market: high property prices, equity requirements, conservative affordability rules and regional scarcity prevent many households from buying.
Anyone buying today should look beyond current monthly payments and check that the purchase price, income, equity, maintenance, taxes, reserves and long-term risks all fit together.
Compare apartments and houses for sale in Switzerland
Compare homes for sale by region, budget and property type, and assess purchase price, financing and long-term affordability together.