The Swiss Times - Swiss News in English

Study: Buying real estate will soon be cheaper than renting again

Empty and affordable apartments remain a rare commodity in Switzerland. At the moment, it is better to rent than to buy. However, this could soon change again.

"Buying is currently more expensive than renting. However, this situation will probably turn out to be a brief interlude," Fredy Hasenmaile, Chief Economist at Raiffeisen Switzerland, was quoted as saying in a press release on Thursday.

This is because the key interest rate, which influences mortgage rates and therefore real estate prices, is likely to fall again from the second half of 2024. At the same time, rents are likely to continue to soar. Living in your own property is therefore likely to be worthwhile again in the medium term.

Purchase prices could fall

A real estate study by Raiffeisen Switzerland also shows that significantly more residential properties are currently being advertised for sale than during the pandemic. Moreover, price growth has more than halved within two years.

At the same time, the price expectations of buyers and sellers are increasingly diverging. As a result, advertisements are being posted for longer and the number of actual purchases is decreasing.

According to the authors of the study, it is "touch and go" how prices will continue to develop. Lower real estate prices are also conceivable.

Rents likely to rise further

The situation looks less rosy for tenants. Across Switzerland, the number of advertised rental properties has fallen sharply in the last one and a half years. At the same time, rental prices have risen by an average of 4.7 percent.

"Rental price growth will exceed general price growth for the foreseeable future, even though interest rates are already falling again," concludes Hasenmaile.

This is because the mortgage reference interest rate - and therefore existing rents - are likely to remain stable. This means that new tenants in particular will have to dig deeper and deeper into their pockets to be able to afford housing.

©Keystone/SDA

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