Nine out of ten Swiss home owners are satisfied with their housing situation. Still, five percent of all homeowners are planning to sell their house or apartment in the next three years. This is often because their home is too big, the homeowner is retiring or has to move, their children have moved out or they can no longer afford or no longer want to own their property. A year ago, only three percent were willing to sell. Now more and more homeowners are considering selling because they want to realize the appreciation in value since the turn of the millennium. In the last 23 years, the real estate prices in Switzerland have doubled. Some also fear that real estate value could fall as seen in Sweden (minus 15 percent).
Year by year, the average price per square meter rose by 9 percent to 6,667 Swiss francs for houses and by 10 percent to 7,099 Swiss francs for apartments, according to ImmoMapper. The property market started to slightly cool down in the first six months of this year. In the first quarter of 2023, home prices still rose by 0.5 percent and fell by 1 percent when adjusted for inflation. This trend continued in the second quarter of 2023: while prices for condominiums stagnated, they declined minimally for single-family homes. Especially in cities, with houses in Schaffhausen, Geneva or Lugano and apartments in Schaffhausen, Neuchâtel or Geneva leading the way.
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Anyone over 50 is likely to remember the last real estate crisis in the early 1990s. Good economic data, a rapidly growing population and federal construction subsidy programs triggered a building boom. Supply greatly exceeded demand, the real estate bubble burst and prices fell by as much as 40 percent. We are a long way from that. According to UBS's Real Estate Bubble Index, the Swiss property market is overvalued, but the index stood at 2.60 in the early 1990s, much higher than today. In the first quarter of 2023, the Real Estate Bubble Index fell from 1.57 to 1.49. Between 1 and 2, the market is considered overvalued; above 2, there is a real estate bubble risk - so according to the index, there is no danger in Switzerland at the moment. For its calculation model, UBS takes into account various important key figures. These include the ratio of owner-occupied home prices to annual rents, household incomes and consumer prices, loan applications for buy-to-let - i.e. properties purchased with a view to renting them out - and mortgage volumes in relation to household incomes.
UBS has also investigated where the risk is greatest. In many regions, the risk is "low" or "slightly elevated". These are mainly areas where the population is falling. Only in a few regions is the relative risk "elevated" or "high". The highest are around Lake Geneva and Lake Zurich and in parts of Graubünden. Here, purchase prices have risen significantly more than market rents over the past five years. Higher mortgage rates have corrected this imbalance: On the one hand, real estate prices have barely risen locally, and on the other, rents have continued to rise. That is why UBS has lowered the relative risk for Geneva and Zurich from "high" to "elevated".
In the first six months of this year, demand fell due to higher mortgage rates and thus higher housing costs, and fewer properties were sold than in the first half of 2022. Although supply has increased and demand has fallen, demand continues to exceed supply. Most realtors therefore expect stable to slightly rising real estate prices in the foreseeable future and no major price correction as in Sweden, provided that mortgage rates do not rise more sharply. This does not look likely at the moment: By the end of the year, interest rates for fixed-rate mortgages are likely to rise minimally and for Saron mortgages slightly, with greater fluctuations.
The property market could ease slightly in a few years. Because the share of employed residents will decline from 2025 and the most populous cohort, 1964, will retire in 2029, supply could increase. Because the birth rate is falling at the same time and 1.4 children per woman is not enough to compensate for the probable decline in net immigration from abroad, demand is likely to fall. Experts expect baby boomers to bequeath or sell more than 400,000 houses and apartments from 2030 to 2045. The bottom line is that this argues for falling real estate prices. More strongly in communities with above-average numbers of older residents, less strongly in cities with more families and young people.
"Forecasts are difficult, especially when they concern the future" - this quote, attributed to Karl Valentin, Mark Twain and Winston Churchill, among others, also applies to the property market. Especially when it comes to medium- or long-term forecasts.
No two cases are the same. Each homeowner must decide for themselves whether now is the right time. When making your decision, give more weight to your personal life situation than to the property market or mortgage interest rates. For example, if you change jobs and move from Winterthur to Zurich, or if you get divorced and take over the house or apartment. Think carefully about whether a few thousand or ten thousand francs more in sales proceeds are worth the extra effort and stress if you keep the property and hope for higher prices.
In article "House Sale: What is the Best Time of the Year to Sell Property?" you can read more about time factors such as the property market, mortgage interest rates or property gains tax.
Whether you sell or wait is your decision. These tips will help you catch the right time to sell for you:
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Sellers have the longer leverage. That's why many homeowners try to sell their house or apartment without a realtor. This works well if you understand real estate, have enough time and can emotionally detach yourself from your home during price negotiations. Our interactive sales guide leads you safely through the selling process and supports you with smart tools from the market value estimate to the property gains tax calculator.
In all other cases, a realtor is worthwhile. On the one hand, because he takes a lot of work off your hands, from the valuation to the change of ownership in the land register. Secondly, because he knows the regional market better and will probably sell your house or apartment faster at a higher price than you. If a realtor who collects 2 to 3 percent of the sales price as a fee sells your property for 1.25 million instead of 1.2 million Swiss francs, it pays off for you. Without any effort on your part.
In the article "Selling a house: Sell it yourself or hire a realtor?" you can read what a realtor can do for you and why the investment is usually worthwhile. And in the article "House Sale in 10 Steps with Houzy's Smart Tools" you can learn how to do it without a realtor.
