The balloon does not burst, but the air comes out. After nearly 20 years of increase in real estate prices in Switzerland, 2022 heralded a new era. House prices skyrocketed.
The culprit is rising mortgage interest rates that are causing problems for home buyers and sellers. Big crash coming? Or will prices remain high in 2023? Blick asked the real estate experts. These are the answers.
Home ownership is getting more affordable
All market participants agree on one thing: homeowners can no longer count on value increases as in previous years. This is good news for home buyers. “For them, the dream of owning their own home becomes a little more affordable,” says Fredy Hasenmaile, 55, real estate specialist at Credit Suisse.
Hasenmaile expects a significant slowdown in price dynamics, but there is no drop in housing prices yet. Ruedi Tanner (58), President of the Swiss Chamber of Brokers (SMK) and thus Switzerland’s largest broker, says, “We are far from falling real estate prices.”
It’s been clear since August 2022: The National Council Economic Commission wants to remove the precedent rental value. Not only first homes but also second homes will be exempted.
The imputed rental value is the fictitious rental income that landlords have to pay taxes on. Its elimination is good news for homeowners. Even better: the tax breaks – for maintenance work, energy-saving measures or debt interest, for example – should remain.
Thus the maximum variable prevailed in the Economic Commission in 2022. Whether it can pass the National Council in this form is still unclear. The proposal should be discussed in the National Council by the autumn 2023 session at the latest.
It’s been clear since August 2022: The National Council Economic Commission wants to remove the precedent rental value. Not only first homes but also second homes will be exempted.
The imputed rental value is the fictitious rental income that landlords have to pay taxes on. Its elimination is good news for homeowners. Even better: the tax breaks – for maintenance work, energy-saving measures or debt interest, for example – should remain.
Thus the maximum variable prevailed in the Economic Commission in 2022. Whether it can pass the National Council in this form is still unclear. The proposal should be discussed in the National Council by the autumn 2023 session at the latest.
There’s more room for bargaining
In some cases there may be more room for negotiation. “For prospective buyers, it may be worth the wait,” says Tanner. However, the real estate market is far from being a bargain market.
Tanner expects regional disparities in the real estate market to widen further this year. Prices may come under pressure, especially in rural areas. For example in Jura or Emmental. However, instead of sideways movements, there will be no price cuts in any region.
According to the SMK Chairman, local price corrections are possible: “We’re talking about a 0.5 to 4 percent maximum reduction, depending on the region,” says Tanner. For a property worth one million francs, this is between 5,000 and 40,000 francs.
Scarcity supports prices
Hasenmaile of Credit Suisse sees things differently. “In case of a price correction, this should be observed all over Switzerland,” he says. Because very low mortgage rates in the past would drive prices up everywhere. Accordingly, an increase in interest rates should everywhere reduce demand and therefore prices.
In the medium term, namely the next three years, even Credit Suisse cannot ignore price corrections in the Swiss domestic market. “However, these should remain manageable, as significant scarcity drives prices,” Hasenmaile says.
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