info suisse Winter 2015
Real Estate | Switzerland-Canada Comparisons
December 2015

House Prices, Mortgages and Property Taxes in Canada and in Switzerland

(Kurt Schläpfer)
Is it cheaper to own a family home in Canada or in Switzerland? To answer this question, mainly three factors are considered in this article: the house price, the mortgage rate and the property tax.

House prices

It is quite difficult to compare house prices in Switzerland and Canada. To be fair, the comparison should refer to a common type of property, for instance a detached single family home and to a comparable location in both countries. Are Toronto and Zurich in this respect comparable? Or do we need to specify a certain area such as Etobicoke in Toronto or Zurichberg in Zurich? Instead of comparing absolute prices, one can use a relative measure that is less dependent on the location of the house, namely the so-called House Price Index. This index shows how the house prices develop over time. The figure below gives such a comparison for family homes in the Toronto area and in the Zurich area from 1986 to 2013. As can be seen, house prices in Toronto have risen by more than a factor of 3.5 since 1980, while they have not even doubled in the Zurich area. In both countries, a peak was reached in the years 1989/1990, after which prices have fallen again. It took about 13 years in Toronto and in Zurich even 20 years until the house prices have risen to its former peak. Since March 2012, the price increase has slowed in Toronto (only 1.6% in a year), while in Zurich the annual increase was still 5.9%. 

Mortgage interest rate

For buying a house it is primarily important under which conditions a mortgage is available. There are significant differences between Canada and Switzerland. A peculiarity in Canada is that a mortgage must always be repaid. The standard amortization period is 25 years. The amount of interest paid for the mortgage increases then by the amount of the annual repayment (see example in table). In both countries it is customary to make a down payment of at least 20% of the house price. For lower down payments it is mandatory in Canada to pay mortgage default insurance. If, for instance, the down payment is 10%, the insurance percentage is 2% of the mortgage value. A mortgage of $400,000 increases in this way to $408,000. The mortgage rates have always been higher in Canada than in Switzerland (see chart). The difference was almost 4 percentage points on average over the last 30 years. In both countries, a maximum value was attained in the years 1989/1990, while the minimum value is reached today. It should be mentioned that the interest rate varies between mortgage providers. Currently (April 2013) in Ontario, a 5-year fixed mortgage is available at rates between 2.74% and 5.24%. In Switzerland, the variation is much smaller with values between 1.38% and 1.95% for a 5-year fixed mortgage. Because house prices are rising with falling mortgage rates, the Federal Government of Canada was worried about the risk of developing a "housing bubble". In July 2012 it took a step to cool off the housing market by limiting the maximum amortization period to 25 years. Moreover, for house prices more than 1 million dollars the down payment must be at least 20%. The following table gives a comparison between Canada and Switzerland for a mortgage of SFr/C$ 400,000 and the resulting annual payments. Due to the required amortization in Canada, the effective annual rate is 6.3% rather than 4%. 





CHF 400,000

$ 400,000

Mortgage rate






25 years

Payment per year

(interest +amortization)

CHF 6,000

$ 25,336*

Property Tax

In Ontario, property values are assessed by the Municipal Property Assessment Corporation. Every four years, property owners get notified about their latest assessment. The assessed value is not identical with the market value of the house, but typically about 30% lower, and this both in Toronto and Zurich. 

In Switzerland, owners who occupy their property have to pay tax on the theoretical rental value of their property (in Switzerland called "Eigenmietwert"), as if they were actually receiving that income. This fictitious rental income is added to the taxable income – a unique system in Europe. In the following the two systems are compared based on an assessed property value of SFr/C$700,000. In Toronto, the property tax for residential homes is 0.07712% resulting in a tax amount of C$5,398. In Zurich, the rental value of a property is 3.5% of SFr 700,000 which equals SFr 24,500. From this amount 30% are taxfree. From the taxable amount of SFr 17,150 20% are deductable for maintenance costs. Hence, the rental value is SFr 13,720. The resulting tax on it depends on the total income and the corresponding tax bracket which in case of typically 30% equals SFr 4,116.  If the maintenance costs are higher, they may be deducted up to the amount of the total expenses. So for example if a home owner invests in new heating equipment in a Swiss home, the full investment costs are deductable. In addition, mortgage interests are tax-deductable, even if they exceed the tax from the rental value. This is a reason why many Swiss home owners refrain from paying back their mortgage.

Comparison between Canada and Switzerland

Due to a slower rise of the Home Price Index, 2013 could be a good year to buy a family home in Toronto. In Switzerland, home prices are still clearly rising. The mortgage rates in Canada are less attractive than those in Switzerland, and the requirement to pay back a mortgage is a further handicap when comparing the two countries. Moreover, the property tax in Canada is distinctly higher than in Switzerland. It is even theoretically possible that the tax on a Swiss home owner’s property is zero if he or she can deduct mortgage interest and/or extraordinary investment costs. The author of this article is in the advantageous position to be able to compare his own Swiss home with the family home of his daughter in Toronto. Both properties are detached single houses.          
SCCC Corporate Members
  • Habib Canadian Bank  (Subsidiary of Habib Bank AG Zurich)
  • Zurich Canada
  • Laderach (Canada) Inc.
  • Custom Spring Corporate
  • Rolex Canada Ltd.
  • Lette LLP
  • Swiss Business Hub
  • Roche Canada
  • Swissmar Ltd.
  • Swiss International Air Lines Ltd.
  • Endress + Hauser Canada Ltd
  • Hilti (Canada) Corporation
  • Switzerland Tourism
  • Mazars LLP
  • Canadian Tire Corporation
  • Lindt & Spruengli (Canada) Inc.
  • Adecco Employment Services Limited