Signs of a slowdown in the Swiss housing market are increasing, and it’s not because of falling outside temperatures.
After years of rising prices, the overheated domestic market is finally on the move, according to a recent real estate survey by Zürcher Kantonalbank ZKB. This is because, among other things, fixed-rate mortgages double in a matter of months.
Corona explosion is over
With the pandemic, there would be a real rush of 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.
According to ZKB, the rate of price cuts in sales ads has increased from 3.5 percent in 2021 to almost 6 percent now. “Homes are no longer bought at any price,” the study says.
Financial benefits evaporate
According to ZKB, the monetary advantage of home ownership disappeared due to high interest rates. 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.
demand decreases
The real estate market Homegate and the Swiss Real Estate Institute (Swiss REI) came to a similar conclusion in a study published Tuesday. He says demand has dropped.
The supply of detached houses is still low. In the period of July 2021 – June 2022, a total of 50,000 real estate advertisements were posted. Compared to the same period last year, this is an 18% decrease.
Large regional differences
However, the duration of the ads remained more or less the same. Sales ads stay on the internet for about two months. According to experts, the fact that the significantly reduced supply does not lead to a significant reduction in advertising times may be a possible indicator of the decrease in demand for single-family homes.
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. 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. This is good news for those who want to buy a holiday home, for example, in the south or in the mountains. (SDA/dvo)