Buying your own home is still valuable here when prices go up.

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In most municipalities in Switzerland, renting an apartment is now cheaper than buying a condominium. This is mainly due to the sharp increase in financing costs for home ownership. On the one hand, housing prices have increased in recent years and remain high. On the other hand, mortgage interest costs have more than doubled in a year.

Buying your own home is no longer valuable. Or is it? Whether or not home ownership is still valuable depends heavily on the long-term evolution of real estate prices. If these go up, owning a home is still worthwhile as an equity investment – this is illustrated by new figures from real estate consultant Wüest Partner.

“From a long-term perspective, having a home in many places can still be valuable,” says Robert Weinert (44), Head of Immo-Monitoring at Wüest Partner. However, in 95 percent of municipalities, prices need to develop positively,” he said.

Comparison

The consulting firm calculated this based on an average Swiss condominium. The flat is 120 square meters, was built in 2018 and 80 percent is externally financed. A 10-year fixed-rate mortgage with a 3 percent interest rate covers 65 percent of the purchase price. A second variable mortgage at 3.5 percent is available for an additional 15 percent of the purchase price.

Wüest Partner has calculated the cost of this property for the next 16 years – this is the average holding time for a condominium in Switzerland. The second mortgage will be redeemed during this time. Maintenance costs, taxes and lost returns are also considered for an alternative investment.

Wüest Partner compares the costs of owning a house with a similar rental flat. For rental property, the study’s authors assume a 2.5 percent annual increase in rent.

Prices should go up here

Conclusion: In many communities, owning a home is still valuable today, given property prices are rising. In 1,687 of the 2,148 communities, house prices need to increase by up to 1 percent per year to be at par. In 47 communities, more than 1.5 percent change in value is required per year. Many of these communities are located in central Switzerland, on Lake Zurich and in the canton of Graubünden.

“Looking back almost 40 years shows that such value increases are quite realistic,” Weinert says. There is also protection against inflation – at least in the long run. In addition, the motto should continue to be applied: the better the situation, the greater the chances of making a profit.

But there are also areas where owning a home somehow pays off. “In almost 5 percent of all communities, owning a home is even cheaper than renting,” Weinert says. This primarily affects rural villages in western Switzerland and Valais, such as the communities Guggisberg BE, Eggiwil BE and Fieschertal VS.

Source :Blick