The supply of detached houses is still low. In the period from July 2021 to June 2022, a total of 50,000 properties were advertised, according to the real estate market Homegate and the Swiss Real Estate Institute (Swiss REI) in its current study on Tuesday. Compared to the same period last year (July 2020 – June 2021), this is an 18% decrease.
On the other hand, the duration of the ads remained more or less the same, about 2 months. According to experts, the fact that this significantly reduced supply does not lead to a significant reduction in advertising times may be a possible indicator of the decrease in demand for detached houses.
However, there are distinct regional differences. For example, vendors in the canton of Zurich had to wait only a month for the sale to take place, while the ad time in Ticino is now 138 days. Here, the duration of advertisements has increased by 17 days, while in German-speaking Switzerland, the duration has been reduced in all regions. This means that a detached house in Zurich is sold almost five times faster than in the southern canton of Switzerland.
Demand for single-family homes in general increased only in eastern and northwestern Switzerland and Zurich. For example, despite the 5.1 percent increase in the number of advertisements in Zurich, the length of the advertisements decreased by 3.3 percent. On the other hand, demand in the Vaud/Valais region fell significantly, as the length of ads increased by a significant 24 percent, despite a 28 percent lower supply. According to Homegate/SwissREI, this is good news for those who want to buy a holiday home, for example in the south or in the mountains.
The opposite development can be seen in different price segments. In the segment of more expensive single-family homes from CHF 1.5 to 2.5 million, all regions are in the area of increasing or sustained demand, while the demand for cheap single-family homes is falling in almost all regions in the range of CHF 0.5 to 1.0 million. Eastern and northwestern Switzerland are exceptions. Experts see one possible reason, especially in the fact that wealthy families support their children with home financing through cash inheritance, so they can choose the property they want in the higher-priced segment.
According to its current real estate research for the canton of Zurich, ZKB also observes a “welcome” cooling in the home ownership market. After years of price increases with fixed rate mortgages doubling thanks to the turnaround in interest rates, there has been a lot of movement in the market in just a few months.
With the pandemic, there would be a real rush for hosting, thanks to the ‘cocoon effect’, the retreat into private life at home. With higher interest rates, two attempts are now needed before an object can be sold. Usually at lower prices. In the canton of Zurich, for example, housing prices once again set a record in the third quarter, but price growth slowed. “Houses are no longer bought at any price,” according to ZKB.
Due to higher interest rates, the monetary advantage of home ownership has almost disappeared. Meanwhile, the living costs for a default 5-year mortgage with an 80 percent loan-to-value are even higher than the rental costs for a comparable apartment. It’s cheaper to own property than to rent with just a flexible Saron mortgage. However, starting from the next rate hike, the overflow point will be exceeded here as well. However, supply remains extremely tight and little change is likely for now. Therefore, large price effects are not expected.
(SDA)