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The crisis has now spread to home ownership, as a story from my circle of friends shows: A friend of mine is interested in a nice, modern 5.5-room flat located just above the Limmat in the canton of Zurich. Spacious rooms, modern construction standard, sales price: 2 million francs. Too much, he thinks, and calls out to the agent: “How much do you want to pay?” Answer: “1.5 million.”
The broker laughs and says: “That puts you in good company. I’ve already had a few calls to that effect. Everyone wants to pay less.” Specifically: 1.5 instead of 2 million francs, which would be a 25 percent discount.
An extreme example, but probably not an isolated case. The trend in the real estate market has begun to reverse. What was unthinkable a year ago has now become a reality: sales of investment and investment properties are falling, and sales of single-family homes are also failing. This is what “SonntagsZeitung” writes.
Big drop in demand
Some properties are now shown at a very high value on the balance sheet of the pension fund or other investors. Meanwhile, the interest rate environment has changed and other investment options, such as bonds, have become more attractive again. This reduces the value of the real estate. Sales do not take place because pension funds do not want to risk losing money.
Real estate experts think that the demand for detached houses has decreased. Individual brokers are talking about a 20 to 30 percent drop in demand.
Donato Scognamiglio (53) receives emails from worried people who are currently unable to sell their flats or houses and ask him for advice. The situation is generally clear: “I recommend being patient or lowering the price to find more interested parties,” says the long-time CEO and current head of the real estate company Iazi in “SonntagsZeitung”.
The problem: Until recently, potential homebuyers were lining up, but the turn in interest rates has turned the market upside down. Demand decreases, supply increases.
“If you really want to sell, the price can drop 5 percent or more,” says Scognamiglio. The maximum price period for detached houses is over!
Prices are falling in rural areas
Wüest Partner’s evaluation in the regions also shows this. Compared with the same period last year, detached house prices decreased by more than 2 percent in the second quarter of 2023, decreasing the most in Jura, Lugano, Mendrisio, Bellinzona, Central Switzerland, Sarneraa Valley, Saanen and Germany. Upper Simmental or Glarner Hinter-, Mittel- and Underground.
Many of these areas are rural, incomes are sometimes lower than in the centres, and they are not well connected, says Robert Weinert, Head of Research at Wüest Partner, in “SonntagsZeitung”. But prices fell by as much as 2 percent in mostly urban or suburban areas. For example, around Winterthur and Basel. Or in popular agglomerations such as Ausserschwyz, Einsiedeln, Schwyz or Lucerne.
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.
