This is what Raiffeisen Switzerland writes in a study “Real Estate Switzerland – 4th Quarter” published on Thursday. For a meaningful comparison, many special features such as property gains tax or the imputed rental value would have to be taken into account.
However, the analysis by the real estate market experts from Raiffeisen Switzerland shows that, taking into account all relevant influences on home ownership, there has been an average annual return on equity of 7.2 percent since 1988. This investment therefore achieves a return that is only slightly lower than that of a pure Swiss stock portfolio over the same time horizon.
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According to the cooperative bank, similar returns can also be expected for the future under realistic assumptions. “From a long-term perspective, home ownership is practically on a par with equity investments, especially since the return is achieved with significantly lower volatility.
The biggest advantage of home ownership over stocks is that its illiquidity forces owners to stay invested for the long term and simply ride out times of crisis, emphasizes Raiffeisen chief economist Fredy Hasenmaile.
Homeowners would automatically submit to one of the most important principles of successful investing. The investment discipline imposed by owning residential property usually leads to a continuous investment of a high proportion of assets over decades and generates an impressive return.
In order to achieve a comparable financial market return, a tenant household would have to invest its assets in an extremely disciplined manner and not fall into the many psychological traps that lurk in the financial markets.
**Interview with Real Estate Market Expert from Raiffeisen Switzerland**
**Interviewer:** Thank you for joining us today! I understand you recently published the “Real Estate Switzerland – 4th Quarter” study. Can you summarize key findings from this report?
**Expert:** Absolutely! Our study highlights the current trends in the Swiss real estate market, focusing on various factors influencing property values and investments. We emphasize the need for a comprehensive analysis, including aspects like property gains tax and imputed rental value, to offer a holistic view of the market’s performance.
**Interviewer:** Interesting! Why is it important to take special features like property gains tax into account when analyzing the real estate market?
**Expert:** These factors can significantly affect the true costs and returns of real estate investments. For instance, property gains tax can impact an owner’s net profit upon selling a property, while imputed rental value can influence the perceived value of a home. Without considering these elements, any assessment of the market could be misleading.
**Interviewer:** What trends are you seeing in the real estate sector, especially in comparison to previous quarters?
**Expert:** We’ve noted a robust interest in residential properties, driven by low mortgage rates and changing lifestyle preferences post-pandemic. However, the market is also facing challenges such as rising construction costs and regulatory changes, which could temper future growth.
**Interviewer:** How should potential investors prepare for these market conditions?
**Expert:** It’s crucial for investors to stay informed about both macroeconomic factors and local market dynamics. We recommend conducting thorough due diligence and considering the long-term implications of tax policies and market fluctuations before making investment decisions.
**Interviewer:** Thank you for these insights! Any final thoughts on the future of the Swiss real estate market?
**Expert:** The Swiss real estate market remains resilient, but potential investors should stay cautious and strategic. The landscape may evolve rapidly, so continuous monitoring of both market indicators and regulatory developments will be vital for success.
**Interviewer:** Thank you for your time and expertise today! We look forward to the next quarter’s findings.
