Housing remains a scarce commodity in Switzerland
Published: Thursday, Nov 7th 2024, 08:50
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The shortage on the Swiss housing market continues to increase. The number of vacant apartments fell in the third quarter. Meanwhile, the situation for owner-occupied homes has eased, at least temporarily. But this is also likely to change soon.
The symptoms of scarcity on the rental housing market are spreading to more and more regions. According to the latest "Real Estate Switzerland 4th Quarter" study published by Raiffeisen Switzerland on Thursday, many tenants are moving to the agglomerations and rural areas due to the tight situation in the centers.
The vacancy rate for rental apartments has now fallen for the fourth time in a row. The figure recorded on June 1 is still 1.44 percent, compared to 1.60 percent in the previous year. And there should be no hopes of a trend reversal, Raiffeisen chief economist Fredy Hasenmaile is quoted as saying in the study.
Temporary contrary trend in residential property
The situation is currently slightly different for owner-occupied homes. In the last twelve months, the number of vacant owner-occupied properties across Switzerland has risen by almost ten percent. The vacancy rate in 2024 is now 0.58 percent after 0.53 percent in the previous year. This is the second time in a row that vacancy rates for residential property have increased.
These signs of easing are a direct consequence of the abrupt rise in mortgage interest rates from the end of 2021. This has caused financing costs to rise sharply and renting a home has temporarily become cheaper than owning one again.
This removed one of the most important arguments for buying, the report continued. In addition, there was great uncertainty as to whether there might be a price setback.
Turnaround due to interest rate cuts
As a result, the number of properties for sale has increased. However, this is now changing again as interest rates fall. Home ownership has become much more attractive again. When buying a typical condominium, savings of 10 to 16 percent are currently possible compared to renting.
With the prospect of further interest rate cuts by the Swiss National Bank (SNB) and a simultaneous rise in rents, the housing cost advantage is likely to increase further in the near future.
Based on its interest rate forecasts, Raiffeisen Switzerland does not rule out savings in housing costs of up to 25 percent when buying a home in the near future. Rising demand coupled with a tightening supply should then also lead to higher prices.
©Keystone/SDA
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