The Swiss home ownership market will remain stable in 2024, particularly in the single-family home segment. Despite global economic uncertainties, mortgage interest rates are comparatively low and continue to offer attractive conditions for potential buyers. The desire to own a home remains deeply rooted in Switzerland. Current studies and analyses point to unbroken demand, with a moderate increase in supply.
Increase in supply with stable demand
According to the latest edition of the Online Home Market Analysis(OHMA), conducted by the real estate portal ImmoScout24 in collaboration with the Swiss Homeowners Association and the Swiss Real Estate Institute, around 75,000 single-family homes were advertised on real estate portals between July 2023 and June 2024. This corresponds to an increase of 36% compared to the previous period. Despite the increase in supply, the average insertion period remained virtually unchanged, rising by only 13% to 76 days. These figures show that the market was able to absorb the increased supply without drastic changes in the selling period.
There are many reasons for this stable market. In addition to the desire to own a home, the easing of mortgage interest rates also plays an important role. While interest rates had risen sharply in the previous period, the rates for five-year fixed-rate mortgages had fallen by around half a percentage point by the end of the current reporting period. This created more attractive conditions for financing a home for many potential buyers.
Why is the detached house so popular in Switzerland?
There are many reasons for the continuing demand for home ownership:
- Stability and security: Many Swiss see their own home as a secure investment for the future and an opportunity to build up wealth.
- Quality of life: A house of your own offers more freedom and design options than an apartment.
- Tax advantages: Home ownership can offer tax advantages under certain conditions.
Regional differences in the sales process
Market activity varies from region to region. In the Zurich region, the average insertion time rose from 43 to 51 days, while in Central Switzerland there was a more significant increase from 57 to 79 days. In the Vaud/Valais and Geneva regions, on the other hand, the time taken to sell single-family homes fell by 1% and 12% respectively. These differences reflect the varying demand and supply depending on the region. While high demand quickly absorbs supply in urban centers such as Zurich, rural regions can have longer sales times.
Mortgage interest rates and their development
Mortgage interest rates are a key factor influencing the Swiss real estate market. After rising in previous years, interest rates for five-year fixed-rate mortgages eased by half a percentage point between mid-2023 and mid-2024. This development had a positive impact on sales figures for single-family homes and motivated both sellers and buyers to remain active on the market. According to experts, this adjustment in interest rates shows that the market continues to be characterized by high demand.
The mortgage landscape in Switzerland has been strongly influenced by the monetary policy decisions of the Swiss National Bank(SNB) in recent years. After the 2008 financial crisis, the SNB’s expansive monetary policy resulted in low key interest rates in order to stabilize the economy. These measures affected both fixed-rate and SARON mortgages.
The key interest rate remained unchanged until June 2022, before the first change in six years: a rate hike. This was followed two years later, in March 2024, by the first interest rate cut since this increase. Interest rates for five-year fixed-rate mortgages were around 1.59% in August 2024, while SARON mortgages, including the margin, were quoted at around 1.86%. These interest rates are considered attractive for borrowers and offer a good starting point for financing.
Challenges for buyers
Buying a home is associated with various challenges:
- High real estate prices: Prices for residential property in Switzerland have risen sharply in recent years.
- Equity: Buyers usually need a considerable amount of equity to be able to finance a property.
- Regulations: The Swiss real estate market is subject to various regulations that can influence the buying process.
Tips for the real estate search
- Assess your budget realistically: Calculate exactly how much you can afford.
- Secure financing: Obtain offers from various banks at an early stage.
- Set up a search subscription: Subscribe to various search requests on different pages
- Think long-term: Think about how your life situation could develop over the next few years.
- Professional advice: Seek advice from an experienced real estate agent or notary.
Conclusion
Experts believe that the market for single-family homes in Switzerland will remain stable in the coming years, although external factors such as economic developments and interest rate changes could have an impact. They see the robust market volume and stable demand as confirmation that the single-family home will remain a preferred housing model in the future. Demographic change and the trend towards sustainable construction methods could contribute to the way in which single-family homes are planned and used evolving.
Data are without guarantee. The information on these Internet pages has been carefully researched. Nevertheless, no liability can be assumed for the accuracy of the information provided.