HEV Deputy Monika Sommer speaks bluntly: “Home financing is unlikely without inheritance or grants”

Buying real estate with a mortgage has become more expensive. How much does this reduce hosting demand?
Rising interest rates are not the real problem. When issuing a mortgage, banks calculate affordability based on an imputed mortgage interest rate of 4.5 to 5 percent. Current housing loan interest rates are around 3 percent, well below that. The main problem is the very high prices for hosting. Since 2002, the average nominal wage in Switzerland has increased by 23 percent. In the same period, nominal housing prices increased by 60 percent. As a result, owning a home has become an unattainable luxury for the majority of the population. Only about 10 percent of tenants today have enough income and assets to afford an average property. It is no longer possible to finance your own home without inheritance or family assistance.

With the sustainability initiative launched by SVP, the impact of immigration on the real estate market is becoming a political issue. To what extent does immigration contribute to the scarcity of rental apartments?
The lack of supply of flats and detached houses is problematic. From our point of view, the shortage of living space and the associated price increase have three main factors:

• Deep residential construction activity – particularly in the real estate sector
• continued strong immigration and
• Increase in per capita consumption of living space due to the increase in the number of single-person households, social changes due to the pandemic and other reasons.

How can this shortage be eliminated?
It is basically a purely mathematical problem. In 2022, more than 200,000 people arrived in Switzerland, including refugees. Since 2013, 50,000 new apartments have been built in Switzerland every year – mostly rental flats – which is not enough from an immigration point of view. This shows the increasing housing shortage. Assuming that citizens have the right to decide for themselves how much living space they need, the solution to the problem may be either to encourage housing production or to limit immigration. Ultimately, politics must decide which screw to turn. However, construction is needed to reduce the pressure on the housing market in the short term.

Now rents are rising, the link between rent and the reference interest rate is under pressure. Are you in favor of a system change – for example, should rents change according to normal inflation as before?
Especially since this system is not satisfactory and its connection with normal inflation has been removed, system change is not a problem for us at the moment. It is wrong to change the rules of the game in the middle of the game. It is definitely the tenants’ association that always charges rent. But when costs rise, they no longer like the idea of ​​tying up rents and costs—in this case, the cost of mortgage interest.

Many poorly insulated single-family homes heated by oil or gas will need to be renovated over the next few years. Do owners who want to sell such properties have to take into account a sharp reduction in the selling price?
The selling price of a property depends on several factors. One of the most important is the location, which determines the price of the land. Especially when it comes to single-family homes, the land price often determines the value of the property and its selling price. Old detached houses are often demolished to build new ones in the country. The current heating is then insignificant. Investing in a new, expensive geothermal heat pump shortly before an old home is sold is not profitable in such situations.

For Switzerland to meet its climate goals, CO2 emissions from real estate need to be reduced. Will the greening of the building stock raise rents and house prices?
It cannot be done for free. Investments in ecological improvements will certainly lead to higher housing costs for tenants and landlords alike. Because a very small part of the investment costs are covered by subsidies. Especially in old, poorly insulated buildings, a new heating system is often not sufficient and the building insulation also needs to be improved. In the case of very comprehensive measures, a backup building may also be specified. If the land is misused, more living space can be created in this way. Whether the measures taken in ecological heating systems will also pay off financially for residents depends at least on the development of energy prices.

Spatial planning places ever tighter boundaries for construction. If population and housing needs continue to grow so rapidly, will Switzerland have to develop additional land – or can sufficient housing be created through concentration alone?
Internal consolidation will be the order of the day. Unfortunately, this is difficult to implement in practice. Various legal requirements ensure this. New construction projects – especially in cities – often fail due to overly stringent noise protection measures. A more flexible, less restrictive application of homeland and monument protection standards will allow better use of existing buildings as well as new construction. Construction processes should also be simplified and shortened through digitization.

Do you see other levers?
As a pure instrument of power, objections should be avoided and abuses approved more consistently. Adding floors to existing buildings and constructing new buildings instead of them should be made easier rather than hindered by tenant objections. In this way, more people can be accommodated in the same area. This includes facilitating loft conversions, for example. Usage figures will be increased. However, in cases where the living space need cannot be met by internal compaction, zoning is also required.

Monika Sommer answered the questions in writing.