Analysis of the real estate swiss market -
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Analysis of the real estate swiss market

The most recent financial reports on the state of health of swiss real estate market return data and analysis encouraging: in the last year, the dynamism of the sector and the sale of apartments in Zürich indicate a contrasting trend compared to the decrease of the other European countries. At the same time, the rentals in Lugano intended for frontier workers offer interesting food for thought: here are, therefore, some indications in order to find your way.

The trend of the real estate investment in Switzerland

Ernest & Young, one of the most quoted worldwide consulting companies, has long raised under observation the swiss real estate market, by highlighting that the attractiveness of the investment in this sector has remained very hight in the biennium 2017-2018, also thanks to the low interest rates and to the greater stability compared to other sources of investment, like stock market.

The most recent informations come, instead, from studies conducted by the Swiss National Bank and by the Credit Suisse, one of the main financial institutions of the country. Under this profile, the data represents an index very important for those who are considering the possibility to live in Switzerland and they are looking for real estate options, whether for transfer or for an investment operation.

Under this profile, the perspectives for the future also differ sharply depending on the sector. Particularly, the development of prices seems to be steady for what concerns the real estate destined to become offices, while for what it concerns the sale of apartments in Lugano and in other swiss cities there is a slight, but always increasing, trend.

Finally, for what concerns the rentals in Zürich and in the other main cities of the country, the conditions remain, for better or for worse, constant, with a strong dynamism of the market and a strong replacement of the contracts, caused by the presence of several requests for a working establishment in Switzerland.

The stability of the real estate swiss market

The safety of the real estate system in Switzerland helps the development of the sector, allowing all those who are considering the swiss real estate listings to fall back on, in the long term, on increasing values and buildings of new construction on the rise. Taking as a model the Canton Ticino, it is possible to note the presence of qualitative and investment standards placed at a very high level for those who want to buy or to sell a house, but also for those who are looking for houses to rent in Lugano or in the other swiss Cantons.

The factors that influence this trend are essentially the following:

1) General price increase

After a downturn that had raised some worries about the growth of the real estate sector, in 2018 the prices for the property of dwellings are increased again, achieving record levels.

This factor produces an interesting economic recovery in the field of housing property demand, also considering the lower mortgage interest. From the perspective of buyers, buy today an apartment in Lugano costs more than yesterday, but it also represents an interesting investment due to the increasing dynamism that are taking the real estate values.

The result is also a recovery in the sector of promoters and builders, who have seen optimism for the growth and they are more likely to expand again the living spaces for those who are looking for real estate solutions in Switzerland.

2) Low interest rates

Like the price increase, the permanently downward trend of interest rates seems to be one of the main index of a positive recovery in the real estate sector. According to the opinions and the analysis of the swiss real estate market, the rates should remain particularly low for the rest of 2019, due also to the traditional preference of ownership compared to the rentals in Lugano and to the lower presence of bids in the sales sector compared to that of leases.

3) Influence of the other economic sectors

The cause of the general stabilisation of the swiss real estate market should be also searched in the presence of positive short-term conditions, like the expected increase of the GDP for 2019, that suggests a +1,7%, with an interesting downturn of the unemployment rate. The positive trend that also concerns the economic development and the domestic sector seems to indicate an increase of income and of wages, that favours in turn the development of new construction buildings.

4) Immigration

The new immigration policies, that have led to a significant drop of entrance quotas, represent an additional factor that has determined the curb to the rise of liens. However, this index particularly influences the subject of the rentals in Switzerland, since the lower demand also leads to a decrease of offers, with a consequent vacancy rate particularly low and a generalised increase in the price of fees. From the perspective of owners, therefore, they are conditions particularly favourable for those who are looking for a strong investment.

5) New buildings

Buy a home in Switzerland is also advantageous as a result of the recovery of the new buildings market, with an increase in the number of new real estate offered for sale or for rental. Nevertheless, we have to point out a price increase of the old building's rentals compared to the previous years, which makes it cost-effective for those who wish to rent a house and turn the attention to the new buildings or to the real estate present a short while on the market (for which we report a reduction of more than two percentage points).

Living in Switzerland: better to rent or to buy?

In the light of the factors that we have considered, who wish to move in Switzerland can be faced with the alternative between rent or buy an apartment. Under this profile, the increasing trend of the swiss real estate market should suggest the opportunity to consider the sale of real estate in Lugano or in other regions of the country, on the basis of low rates and of the increase in value and rental revenues.

It follows the importance to understand how and where buy a real estate in Switzerland. In terms of costs, it is important to clarify that the larger impact is determined both by the area where you decide to buy and by the type of real estate that you wish to purchase. Particularly, villas and the other individual dwellings result more expensive than apartments.

On the other hand, instead, the price trends of these latter are generally higher than in Italy, even if these data must be compared with an average level of the salaries more higher. In particular, an average enables to estimate the price of a studio from 100.000 swiss francs, while for an apartment with three rooms can start from around 400.000 swiss francs. On the contrary, for what it concerns the rental of apartments in Lugano, the average prices are around 1.500 CHF per month for a three room apartment distant from the city center, to which must be added the condo costs that are around 70/80 CHF per month.

The assessment on the purchase of a house in Switzerland also depends from the duties applied to the property. This profile is also influenced by the region concerned, since each Canton has its own tax regulations. So, if you are looking for apartments for sale in Lugano, it is good that you know what expenditure you will face up.

By the way, to give you an example, if you live in Lugano and, generally, in the Canton Ticino, the taxes on the property amount to the 1,4 per thousand of the cadastral value. At the same time, if you decide to rent the real estate, you would also pay the taxes on rental values, of course by the part of the lessor.

Furthermore, you should also consider the rules that concern the purchase of a house in Switzerland. Italians, as EU citizens, need a specific authorization to register the acquisition among the land register.

To these conditions and assessed overall the swiss real estate market, so we can conclude by highlighting the general convenience of purchase a home in Switzerland: this investment, in fact, allows to the current state to significantly strike back on the increasing real estate value, by benefiting overall of a non-exaggerated taxation and a strong attractiveness in the field of rentals.