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People in Switzerland are willing to spend a lot of money on a house with a garden. Because the supply is tight. ZKB already sees home ownership as a phased-out model.
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The single-family house is increasingly becoming obsolete, says the Zürcher Kantonalbank.
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The reason for this is the high prices: Many can no longer afford real estate.
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Those who are rich enough often do not hesitate to pay a lot of money for home ownership.
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The fear of missing out on home ownership makes it even more expensive.
Many Swiss people dream of owning a house with a garden. But land is scarce, the population is growing and demand is higher than ever. This has caused prices to explode. The dream of owning a home has therefore burst for many says the Zurich Cantonal Bank (ZKB).
Single-family house is becoming obsolete
“Real estate prices have only risen for 20 years,” says Ursina Kubli, Head of Real Estate Research at ZKB. “The single-family house – especially with a change of scenery – is increasingly becoming a discontinued model.” However, it also requires a lot of space and resources and is therefore no longer up-to-date anyway.
As early as 2021, the prices for home ownership rose massively, in the canton of Zurich, for example, by around 9.3 percent. ZKB is expecting a price increase once more this year: A further increase of around four percent is expected throughout Switzerland, says Kubli. Although a house is already unaffordable for many today.
Fear drives prices higher
The corona pandemic has brought the focus back to one’s own living situation, says Kubli. This has also led to a FOMO effect (fear of missing out): tenants are afraid of missing out on home ownership – and are therefore willing to pay high or even too high prices, as Kubli says.
According to the Swiss National Bank, prices for Swiss homes are currently around 10 to 30 percent too high. “It’s not a law of nature that real estate prices always go up,” says Kubli. In the short term, however, the price rally will probably continue, according to the ZKB expert.
If you have a house, you want to keep it
If you own a single-family home, you won’t give it up that easily, says Kubli. It is often difficult to find an alternative. Many clung to a house, even though it didn’t suit the living situation at all.
The under-occupancy of single-family homes is also driving prices up. In this case, the number of rooms is greater than the number of people plus one. In the canton of Zurich, over 70 percent of single-family homes are underoccupied. According to the ZKB, only one person lives in every seventh house – mostly senior citizens.
Houses are now being demolished
And now the supply is also falling: In the canton of Zurich, for the first time this year, more single-family houses are likely to be demolished than new ones built – although every second free-standing single-family house is not even 70 years old when it is demolished. The demolished objects are mostly houses with land in attractive locations.
More than 60 percent of the demolished single-family houses give way to one or more multi-family houses. So there is more space for private buyers – but they hardly get a chance. “They are in direct competition with wealthier institutional investors,” says ZKB real estate expert Jörn Schellenberg.
The cost of second homes has also risen by around 17 percent since 2018. City dwellers pay an average of 19 percent more than locals for a second home in the country, and even 26 percent more in tourist areas. This is partly due to the Second Homes Act, but there is also a “city surcharge” of around six percent, says the ZKB.
“The sellers benefit and have an easy time, because holiday apartments find a new owner faster and faster,” says the ZKB. The buyers are also to blame for this: If you look at Zurich’s price level, the holiday apartments in Arosa don’t seem that expensive anymore. Since their use is low, a surcharge for city dwellers in the country is often considered appropriate.