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Real estate in Switzerland – Where renting is cheaper than buying – Check your community – News

2 September 2022

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For years, owners had the advantage. Renting an apartment is now more attractive again in many places. The overview of all municipalities in Switzerland.

A turning point has dawned in the Swiss real estate market. Until the end of last year, the monthly costs for homeowners were lower than for tenants almost everywhere in Switzerland. Now, in many places, the situation has been reversed.

What is cheaper where you live? Find out in the graphic below!

Red means renting, blue means buying.

The enterprise IAZIwhich offers analyzes and advice on the real estate market, prepared the evaluation for SRF.

For the region analysis, IAZI calculated a market rent and a transaction price for a typical 4.5-room apartment (new building). The prices are based on more than 40,000 effective hands-free transactions per year. The rents are based on the offers of all well-known real estate platforms

For the calculation of the monthly costs for owners, the following has been taken into account:

two 10-year fixed-rate mortgages (the 1st mortgage at 3 percent).
80 percent loan-to-value.
Maintenance costs of 1 percent of the market value per year.
the taxable income from the imputed rental value.

The amortization of the second mortgage and possible gains and losses in value are not taken into account.

The analysts then compared the monthly costs for an owner with those for a tenant. The difference between the two values is given as a percentage ownership premium, i.e. as the value by which ownership is more expensive or cheaper than renting.

The results are rounded to 5 percent values.

In 451 communities where renting was more expensive a year ago, buying has become more expensive today. Sometimes the surcharge is enormous.

In Geneva, Basel, Zurich and Zug, buying is now at least 35 percent more expensive than renting. The tendency also spreads to the surrounding areas of the cities. A similar picture can be seen in St. Gallen, Chur, Lausanne, Lugano and other cities.

The difference is greatest in Zug: Here, buying is 55 percent more expensive than renting. It was already more expensive to own property in Zug a year ago. However, the premium was only 5 percent at the time.

Canton Zurich: Where to buy is more expensive, not only in the city

Striking: In Zurich, the development affects not only the city, but the entire canton. Anyone who buys an apartment in Zumikon, for example, has to reckon with 50 percent higher costs than if he or she were to rent. In Zollikon or the lake districts of Meilen or Rüschlikon it is 45 percent.

10 out of 12 of the municipalities with the largest price premium for buying can be found in the canton of Zurich.

Community	Canton	Buying more expensive than renting
train	ZG	55%
Oberrieden	ZH	50%
Küsnacht	ZH	50%
Zumikon	ZH	50%
Kilchberg	ZH	45%
Rueschlikon	ZH	45%
Thalwil	ZH	45%
Erlenbach	ZH	45%
Herrliberg	ZH	45%
miles	ZH	45%
Zollikon	ZH	45%
Geneva	GE	45%

“Zurich is such a sought-after location, with a center as an economic area – even before the interest rate hike it was difficult to find anything there at all,” says IAZI Managing Director Donato Scognamiglio. “Now it’s even clearer that you have to rent.”

A similar picture emerges around Geneva. Buying is also up to 30 percent more expensive than renting in the communities around the second largest city in Switzerland.

In addition to the cities, the Engadin stands out. In a number of communities (Samedan, St. Moritz, Sils, Zuoz), buying is now 15 to 30 percent more expensive than renting.

There are also some hotspots in Ticino: in the municipalities of Ascona and Paradiso, the ownership premium is 35 percent.

Higher interest rates, more expensive mortgages

The reason for all these changes: Fixed-rate mortgages have become significantly more expensive over the course of this year. Inflation and interest rate hikes by the central banks have led to this development. The longer the term, the more buyers have to pay today. “Now not only is the price of real estate high, but financing is no longer available for free,” says Scognamiglio.

Anyone who buys a property first makes a down payment – most banks require 20 percent of the purchase price. The rest can be encumbered.

In most cases, homebuyers take out two mortgages: a maximum of 67 percent of the lending value as the 1st mortgage, the rest as the second mortgage. Most of the time, only the second mortgage is repaid.
Mortgage interest is charged on the loans.

There are also maintenance costs and insurance costs. The imputed rental value also increases the tax burden. The usual market rent that the property could earn is added and taxed as notional income.

According to Raiffeisen, a 15-year mortgage now costs as much as a typical monthly rent. This does not include maintenance and insurance costs or the imputed rental value.

As of January 1, 2022, fixed-rate mortgages were 1.01 percent for 5-year and 1.26 percent for 10-year mortgages, according to comparison service Moneyland. Now some of them have doubled: on June 20, 2022, 5-year mortgages were at 2.57 percent and 10-year mortgages were at 2.99 percent.

Legend:

SRF

Roggwil, Bern: Buying here is 25 percent cheaper than renting. The purchase of a new 4-room apartment costs 1800 CHF per month on average, the rent 2400 CHF.

Zumikon, Zurich: Buying here is 50 percent more expensive than renting. The purchase of a new 4-room apartment costs 5900 CHF per month on average, the rent 3900 CHF.

There are two real estate worlds in Switzerland. With a few exceptions, buying in rural areas is still cheaper than renting, and prices are significantly lower. In the cities, prices continue to rise. If you want to buy there, you have to dig deep into your pocket – and since this year the monthly burden has been higher than that of tenants.

“The interest rate is not the main lever, but the land price makes a massive difference,” explains Scognamiglio. “In the urban areas, where people like to be, where the density is high, you pay an enormous amount for the price of land. And now you have to finance it.”

Conclusion: Those who live in the country like to own, those who live in the city are better off renting.

Manuela Siegert, Jonas Glatthard (editing), Robert Salzer (frontend development), Marina Kunz (design)