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The housing crisis is expected to worsen in the coming years. The problem: There is a shortage of affordable flats and houses across Europe and in Switzerland. The result of a study by the International Monetary Fund (IMF) quoted in the “Aargauer Zeitung” newspaper is thought-provoking: “The affordability of living space continued to shrink.”
Problem: As interest rates rise, the financing costs of owning a home have skyrocketed. Many people’s dreams of owning their own home have been shattered. The result: Those who dream of owning their own home are not disappearing from the rental housing market, but are instead exacerbating the shortage of affordable rental housing.
Corona exaggeration corrected
Moreover, despite the increase in interest rates, real estate prices did not fall. According to the IMF, the exaggerations during the Corona period have been revised slightly downwards. During the pandemic, many people suddenly wanted to leave the cities and move to their own homes, and at the same time escape from the crowds of people in the cities. Or to meet increased space requirements in the home office.
In many European countries, property prices have fallen, at best, to pre-Corona levels, which were already high at the time. Even this did not happen in Switzerland, prices continued to rise and remain at high levels. This is attractive for investors, consulting firm EY writes. According to the survey, 55 percent of real estate investors expect prices to remain the same in 2024. Still: That’s why it’s not being built anymore. The construction boom of the last few years has been offset by the fact that construction costs have risen sharply with inflation.
Sellers are waiting
This means that there are no affordable offers coming to the market for apartments or detached houses. Since prices in Switzerland remain stable despite interest rate increases, many sellers are not ready to make price concessions. They choose to wait longer for a good offer rather than sell their property for fear of further decline in prices. This attitude will only change if prices start to fall overall.
But this cannot be assumed. And interest costs won’t fall anymore. In other words, the dream of owning your own home is no longer fueled by this perspective. According to comparison portal Moneyland, the significant decline in interest rates on fixed-rate mortgages has stopped for now.
Possible interest rate cuts from the Central Bank have already been priced in, and fixed-rate mortgage prices are currently unlikely to fall further. Currently, the interest rate for a two-year mortgage is 2.25 percent, for a five-year mortgage it is 2.21 percent, and for a ten-year mortgage it is 2.34 percent. This is not going to change anytime soon, as the two current surveys show.
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.
