200 free apartmentsZurich housing shortage – ‘there should actually be street battles’
The already rare apartment vacancy rate is getting worse. 20 Minutes tells you the implications of the turnaround in interest rates for renters, apartment seekers and buyers.
It’s about it
The National Bank’s turnaround in interest rates makes renting more attractive than buying.
But finding an apartment is becoming more and more difficult.
Real estate investors need to rethink their investment strategy.
Die Interest rate turnover by the National Bank (SNB) shakes up the real estate market. Renting is now more attractive than buying in most communities, Donato Scognamiglio of real estate consultancy Iazi said at a press conference on Wednesday. “Now is the age of renting,” says Scognamiglio.
20 Minutes shows how an earthquake affects you in real estate:
The reversal of interest rates and inflation cause the rental prices at which apartments are offered on the market to rise. So-called asking rents will rise by up to three percent next year, according to Scognamiglio, although there are large regional differences. Existing tenants are also at risk of price increases if they have benefited from price reductions in recent years, which applies to roughly 40 percent of tenants.
Looking for an apartment
Immigration is even greater than last year, and yet less is being built. As a result, the already scarce vacancies, especially in the centres, are getting worse. In Switzerland as a whole, it is 1.3 percent (see photo gallery above). There are only 200 empty apartments in Zurich out of more than 200,000 apartments. According to Scognamiglio, most of the empty apartments are already given to friends, which makes finding an apartment even more difficult. A real estate expert says: “It will be a huge political problem that we don’t have apartments, in fact there should be street battles in Zurich.”
The years when low interest rates made home ownership cheaper are gone in many places. Over three percent, ten-year Fix mortgages are already significantly more expensive than at the beginning of the year, and according to Scognamiglio, they will continue to grow. But homeowners will only feel the increase when their mortgage expires and is renewed. The calculation according to Scognamiglio will only work if you switch to the Saron risky mortgage (see box). However, the expected increase in interest rates by the SNB in December should also cause the Saron interest rate to rise to two percent.
This is saron
The Swiss reference Saron interest rate is the average interest rate at which commercial banks borrow money overnight. It is based on the key interest rate of the National Bank, and banks usually add a margin of 0.8 percent to it. With a Saron mortgage, homeowners benefit from the fact that short-term interest rates are usually lower than long-term. The biggest disadvantage compared to a Fix mortgage is the uncertainty of how high the interest rate will be in the future. In extreme cases, mortgage costs can skyrocket in a short period of time.
Source: VZ Vermögenszentrum
Buying an apartment and a house
For family homes, prices should remain at the same high level. For apartment buildings, Scognamiglio expects prices to drop by roughly three percent for the current and upcoming quarters. Condominiums should also become slightly cheaper this year.
real estate investment
Anyone investing in real estate needs to rethink their investment strategy. The previous positive spread between the net return on real estate and the 10-year federal bond has narrowed drastically as a result of the interest rate reversal. Direct investments in real estate are now less and less profitable. Because large investors such as pension funds can only invest 30 percent of their portfolios in real estate, and stocks have lost value since the turn in interest rates, their real estate quotas are too high. This should lead to increased sales of investment properties.
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