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In many cities there are hardly any vacant apartments. If you find what you’re looking for, rents are hard. Against this background, Raiffeisen gave surprising numbers in his real estate research for the second quarter of 2023: the share of housing costs in the household budget has fallen steadily over the past seven years. In 2015, a household had to spend an average of 15.3 percent of its budget on rent, energy, maintenance, a second home and ancillary expenses. In 2022, it was just 13.8 percent.
“Since 2006, when these statistics were first collected, we are currently spending less on housing than ever before,” Raiffeisen writes. And that’s for more living space than ever before! Low housing costs are due to the construction boom in the 2010s. Cheap money and the lack of investment alternatives have led investors to build large-scale real estate as objects of income.
The result was oversupply and falling new rents. Existing rents have hardly increased thanks to the lower reference interest rate, while the mortgage burden for landlords and real energy expenditures have also decreased. At the same time, real wages rose slightly.
Sometimes more than 50 percent of the budget for housing alone
But isn’t everything so bad on the rising housing costs front? Not at all, as the study’s authors write: The average value obscures the fact that “the burden of housing costs has increased markedly for some segments of the population in recent years, and in some cases has reached an alarmingly high level.” .
The 20 percent of the lowest-income households feel it the most. Housing costs have been rising faster than income for decades. The situation is worse for low-income households in economic centers: Those who do not have the privilege of living in a cheap co-operative apartment or taking advantage of a long-term, low rent “for them, the costs of city housing” have reached an unbearable level,” the authors write. Expressed in numbers: The cost of housing here is sometimes 50 percent or even more.
Housing costs are rising sharply for all
On the other hand, some of the middle class and above all the highest-income households benefited from falling housing costs. But here, too, the average value can be misleading: for many years, the load has dropped sharply, especially for condominiums, due to extremely low mortgage interest rates. And only 36 percent of the population lives in an apartment. Everyone rents, and rents have increased by almost 8 percent since 2015 alone, according to the rent price index.
“The cost of living in Switzerland will rise sharply for everyone,” write the study’s authors, as new apartment construction cannot keep up with the high demand. The trend reversal in the real estate market has already happened: “All favorable factors have already disappeared or are now slowly disappearing.” Asked rents have been rising for a long time. As of June 1, the increase in the reference interest rate is causing the current rents to rise as well. And by 2025, the reference interest rate is likely to double. Add to this inflation, large price increases for ancillary costs, and rising mortgage interest rates for owners.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
