Is building cheaper than buying?

The big equation: New construction vs. existing buildings

To assess whether building is cheaper than buying , we need to dissect the price drivers of both options.

1. The land factor: Why it distorts the calculation

The biggest obstacle to making building cheaper than buying is the land.

• When building a new home: You have to buy building land at the current market price. In metropolitan areas like Zurich or Geneva, builders often pay 2,000 to 3,000 Swiss francs per square meter. This high initial price makes it difficult for building to be cheaper than buying .
• When buying: You buy the land and house as a package. Often, the land was acquired cheaply decades ago. Although the seller factors in the increase in value, the "complete package" (house + land) is often comparatively cheaper than buying an empty plot of land today.

In prime locations, it often turns out that building is cheaper than buying , which is an illusion because the bare land alone already exceeds the budget.

2. Construction costs vs. renovation backlog

If you're wondering whether building is cheaper than buying , you need to take a close look at the condition of the property.

• New construction: The costs are high (approx. CHF 800–1,200/m³), but transparent. You have no existing liabilities. Maintenance costs are minimal for the first 10 to 15 years. This planning certainty is an argument for why building can be cheaper than buying in the long run .
• The existing property: An old house may seem like a bargain at first glance. But here lies the trap. Does the roof need repairing? Is the heating system fossil fuel-based? If you have to shell out an additional 200,000 francs for renovations, the calculation falls apart. Then the assumption that building is cheaper than buying has often been wrong – the existing property becomes a bottomless pit.

Whether building is cheaper than buying depends largely on how honestly you factor in the renovation needs of the existing property.

3. Additional costs and fees

Another aspect to consider when deciding whether building is cheaper than buying is the additional costs.

• When building: You pay architect fees, permit fees, connection fees, and interest over the construction period. These "soft costs" often amount to 15–20% of the total cost. They increase the project's cost and contradict the notion that building is cheaper than buying .
• When buying: You pay property transfer taxes and notary fees. These are generally lower than the ancillary construction costs of a new build project. In the short term, this argues against building being cheaper than buying .

4. Energy efficiency as a long-term factor

The perspective changes when we broaden the time horizon. Is building cheaper than buying if we consider a 20-year period?

The new building meets the latest energy standards (Minergie, heat pump). Operating costs are minimal.

An older building consumes a lot of energy. Even if the purchase price was lower, the high heating costs can mean that, over the building's lifespan, building is cheaper than buying . Anyone buying an energy-guzzling property today also has to reckon with legally mandated renovations. These looming costs are a strong indication that building could be cheaper than buying when considering the total cost of ownership.

5. Time and double burden

An often ignored factor in the analysis of whether building is cheaper than buying is time.

• Building: You pay rent for your current apartment and simultaneously interest on the construction loan. This double burden over 18 to 24 months can quickly cost you 30,000 to 50,000 Swiss francs. This makes it harder to argue that building is cheaper than buying .
• Buying: You buy, move in, and pay mortgage interest. The financial friction is minimal.

Regional differences: city vs. country

The answer to the question "Is building cheaper than buying ?" depends heavily on geography.

• In the city: Since there is hardly any building land available, old houses often have to be demolished (demolition properties) to make way for new construction. This is the most expensive option. Here, building is almost never cheaper than buying .
• In rural areas: In rural cantons (e.g., Jura, Glarus), land prices are moderate. Here, a prefabricated house can certainly create a scenario where building is cheaper than buying , especially if existing properties in the village are overpriced.

The conclusion of the evaluation methods

When experts assess whether building is cheaper than buying , they use different methods.

• Comparative valuation method: This often shows that existing properties are traded at a lower price than the sum of land and new construction costs. Statistically speaking, building is therefore rarely cheaper than buying .
• Net present value method (investment): However, if future renovations and energy costs are factored in, the picture changes. In the long term, building can be cheaper than buying because the value is better maintained.

Psychology vs. Economics

Ultimately, the question of whether building is cheaper than buying is also a question of willingness to compromise.

When buying, you make compromises (floor plan, bathroom color ). You "pay" for these compromises with a lower price. When building, you fulfill every wish. This individuality comes at a price.

Therefore, the following often applies: If you are willing to live with the previous owner's taste, buying is cheaper. However, if you want to completely renovate the existing property until it looks like a new build, then building would have been cheaper than buying .

Conclusion

Is building cheaper than buying ? In today's Swiss market, the honest answer is usually: no, purely in terms of acquisition costs, buying is often cheaper. High land prices and strict building regulations make new construction a premium product.

However, the calculation changes if you buy an old house and underestimate the renovation needs. As soon as major renovations are required, building can become cheaper than buying – and, above all, less stressful. Furthermore, new construction offers lower operating costs and a higher resale value in the future. Therefore, the decision of whether building is cheaper than buying shouldn't be based solely on the purchase price, but must include the life-cycle costs.

If you are unsure whether the extra cost for a new building is worthwhile or whether the supposed bargain in an existing building harbors hidden costs, you should use Loft 's data analysis to objectively calculate both scenarios.

Glossary

• Building is cheaper than buying: The economic comparison between the construction costs of a new building and the purchase price of an existing property including renovation costs.
• Cubic volume: The enclosed volume of a building, which serves as the basis for calculating new construction costs.
• Contamination: Soil pollution or pollutants in old buildings (e.g., asbestos) that could make building cheaper than buying .
• Construction period interest: Interest that accrues on the loan during the construction phase and increases the overall cost of the new building.
• Total Cost of Ownership: The total cost analysis over the entire useful life (purchase + operation + renovation), which often shows that in the long term, building can be cheaper than buying .