The SNB's key interest rate of exactly zero percent is a first, writes ZKB in its real estate barometer for the second quarter on Thursday. Previously, there had always been either a positive or negative key interest rate.

The return to a low interest rate environment, on the other hand, is familiar. This also has an impact on the reference interest rate, which is based on the average interest rate of all outstanding mortgages. «SARON mortgages in particular, which are directly linked to the key interest rate, are contributing to the reference interest rate trending downward again after its brief surge,» writes the Kantonalbank.

In March, the reference interest rate fell from 1.75 to 1.5 percent. «We expect a further decline to 1.25 percent by the end of the year.»

As the SNB is expected to leave its key interest rate unchanged in its upcoming assessments of the situation, the rate is likely to remain stable for the time being, according to expectations.

Tenants who were affected by the two previous increases are likely to benefit most from a rent reduction. Based on data from the Federal Statistical Office (FSO), this was around 40 percent of Swiss rental households in the last reduction. If there is a further reduction, ZKB estimates that this figure will rise to 46 percent across Switzerland. In the canton of Zurich, where reference interest rate increases are passed on more frequently than nationwide, this would even be a clear majority at 70 percent.

«Favorable financing costs have further boosted demand for residential property in the canton of Zurich.»

Accordingly, prices in the canton of Zurich rose by 4.0 percent in the second quarter compared to the previous quarter.

Price Increase of 4 Percent per Year

For the real estate market as a whole, ZKB experts forecast further price increases in the coming years. «In 2025 and 2026, we expect price growth of 4.0 percent in Switzerland and 4.5 percent in the canton of Zurich.»

Growth in asking rents is expected to slow down. Factors cited include declining net immigration and a slight increase in construction activity. «Nevertheless, the additional demand for apartments will drive new construction.»