Anticipated Real Estate Trends for Purchasers in Switzerland by 2025
Gearing Up for a Property Boom in 2025
Prepare yourself, folks, ‘cause the property market is about to see a surge like never before in 2025! Here's why: low mortgage rates, baby!
Throughout 2024, the Swiss National Bank slashed its interest rate a whopping four times - from 1.75 in March down to a paltry 0.5 percent in December. Guess what that did to mortgage rates? Yep, you got it! They dropped like a rock too.
wanna know what the rates for 10-year mortgages, aka indicative rates, are at 30 Swiss credit institutions at the moment? A jaw-dropping 1.55 percent! Compare that to the start of 2024 when they were a hefty 2.26 percent.
By the way, if you're curious about the whole mortgage rate drop thing, check out this cool read
Now, before you start popping champagne corks, remember this: increased demand will also jack up prices.
So,how much more expensive are we talking about? Zurich Cantonal Bank thinks it'll be an average of 2 percent, while UBS predicts a 3.5-percent hike and Raiffeisen Bank sees prices increasing by 4 to 4.5-percent. Ouch!
Let's Take a Peek at Second Homes
A new trend is cropping up in the market for second homes, particularly in the Swiss Alps.
The divide between the prices of properties located below and above the altitude of 1,000 meters has become a chasm. A study by Wüest Partner reveals that the higher the altitude, the higher the prices. Go figure, right?
It all boils down to climate change. Global warming has put an end to guaranteeing good snow conditions at low-lying communities. As a result, prices of properties located at high altitudes have skyrocketed by between 55 and 76 percent, according to the study, and are expected to keep climbing in the future.
Here's a Bonus
There's another change brewing for second home owners, but we don't know exactly when it'll happen. Specifically, it concerns the elimination of the rental value tax that MPs agreed on in December. While this move will bring relief to owners of primary residences, second-home owners could see an even higher rental value tax imposed on their properties to make up for the loss of revenue from rental value tax generated by primary residences.
Wanna know more about how second-home owners could lose out in the new tax law? Check this out
Collect Data Points
Here's what's happening behind the scenes:
1. Price Growth Acceleration
Despite some fixed-rate mortgage increases in early 2025, prices are set to continue growing due to sustained low borrowing costs. The SNB’s rate cuts in 2024 have created a financial landscape that's fueling demand.
2. Mortgage Type Shifts
SARON mortgages have become significantly cheaper due to the 2024 rate cuts, driving demand from risk-tolerant buyers.
3. Supply-Demand Imbalance
Low rates and limited housing supply have created competition among buyers, driving prices upward.
From what we can see, moderate-to-strong property demand is expected in 2025, with prices remaining on an upward trajectory barring unexpected supply interventions. So buckle up, folks - it's going to be a wild ride!
- In preparations for the anticipated property boom in 2025, it's worth noting that the average mortgage rate for 10-year mortgages in Switzerland has dropped significantly, currently standing at 1.55 percent, a stark contrast from the 2.26 percent at the start of 2024.
- Given the surge in the property market in 2025, it's crucial to consider that increased demand will likely lead to an average increase in prices of up to 2 percent, according to Zurich Cantonal Bank, while UBS predicts a more substantial 3.5-percent hike.
- As for second homes, a new trend has emerged, particularly in the Swiss Alps, where properties located at high altitudes have seen a skyrocketing increase, with prices rising by between 55 and 76 percent due to climate change and the end of guaranteed good snow conditions at low-lying communities.
- A bonus piece of information for second-home owners is that there's an uncertainty regarding the elimination of the rental value tax, which, if implemented, could result in an even higher rental value tax being imposed on their properties.
