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Even if interest rates rise, the demand for home ownership remains unbroken. But the offers are dwindling.
For 20 years, home ownership prices have only gone in one direction: up. According to studies by the real estate consulting service provider Wüest Partner, the prices for condominiums have risen by an average of 65 percent in this period of time, those for single-family houses by 68 percent.
The market is practically empty.
There is no end in sight to the high demand and rising prices, says Patrick Patrik Schnorf, head of market research at Wüest Partner, on the SRF program Eco Talk: “People have saved a lot, many have a secure income, these are the driving forces factors.” The corona pandemic has increased demand, since government support measures have secured income, and people have been looking for additional living space in the countryside. “But the market is practically empty,” says Schorf.
Higher interest rates have little impact on demand
Inflation in Europe is rising much faster than expected. Experts assume that this could soon lead to rising interest rates in Switzerland as well. This is also reflected in the prices offered by providers of long-term mortgages. A ten-year fixed-rate mortgage now costs about the same as it did four years ago.
However, higher interest rates would not have a major impact on the demand for residential property, says Schnorf: “We assume that due to immigration, the high birth rate and household divisions, demand will remain the same in the near future,” explains the real estate expert.
We live on the island of the blissful. The inflation rate in Switzerland is very low compared to the USA and Europe.
Martin Neff, chief economist at Bank Raiffeisen, does not expect the real estate bubble to burst anytime soon either: “We live on the island of the blissful. The inflation rate in Switzerland is very low compared to the USA and Europe. The market is not overwhelmed by the slight increase in long-term interest rates.” More offers are needed if you want to dampen demand and rising prices, says Neff.
The lack of supply drives up prices
Better said than done. Especially in the cities, the supply is becoming increasingly scarce, they are very attractive and therefore also have a high level of immigration. “The market has dried up. The radius of the real estate search has therefore also extended to the surrounding rural regions, »says real estate expert Schnorf.
The city of Sursee on the Sempachersee in the canton of Lucerne, well located between the metropolitan areas of Lucerne and Zurich, is also feeling this. In the past ten years, the population here has increased by more than ten percent. This was not without consequences for real estate prices. Condominiums have become about 40 percent more expensive in this period. The prices for single-family houses have practically doubled.
There are fewer and fewer areas that you can still build on.
Mayor Sabine Beck-Pflugshaupt is certain that prices will continue to rise: “It has to do with the Spatial Planning Act. There are fewer and fewer areas that you can still build on.” Sursee is therefore doing what is now normal in the cities: you condense. For Schnorf von Wüest Partner, one thing is clear: “We either adapt the spatial planning or we learn to live closer together.” One thing is clear: there is no such thing as unlimited space in Switzerland to satisfy the constantly growing demand for property.