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House prices have peaked. Homes in Weisslingen ZH.
Dorothea VollenweiderEditor Economics
The bubble won’t burst, but the air is out. After almost 20 years of only increasing real estate prices in Switzerland, 2022 heralded a new era. House prices have peaked.
The culprit is the rising mortgage interest rates, which are causing problems for home buyers and sellers. Is the big crash coming? Or will prices remain at a high level in 2023? Blick asked real estate experts. Those are the answers.
Home ownership is becoming more affordable
All market participants agree on one thing: homeowners can no longer count on increases in value as in previous years. This is good news for homebuyers. “For them, the dream of owning their own home is becoming a little more affordable,” says Fredy Hasenmaile (55), a real estate expert at Credit Suisse.
Hasenmaile expects a significant slowdown in price dynamics, but no declining home prices yet. “We’re a long way from a crash in real estate prices,” says Ruedi Tanner (58), President of the Swiss Chamber of Brokers (SMK) and thus Switzerland’s top broker.
The imputed rental value should go
Since August 2022 it has been clear: the National Council Economic Commission wants to abolish the imputed rental value. Not only first homes, but also second homes are to be exempted.
Imputed rental value is fictitious rental income that homeowners have to pay tax on. Its elimination is good news for homeowners. Even better: The tax deductions – for example for maintenance work, energy saving measures or debt interest – should remain.
The maximum variant thus prevailed in the Economic Commission in 2022. Whether it will get through in the National Council in this form is still open. The proposal should be discussed in the National Council at the latest during the 2023 autumn session.
Since August 2022 it has been clear: the National Council Economic Commission wants to abolish the imputed rental value. Not only first homes, but also second homes are to be exempted.
Imputed rental value is fictitious rental income that homeowners have to pay tax on. Its elimination is good news for homeowners. Even better: The tax deductions – for example for maintenance work, energy saving measures or debt interest – should remain.
The maximum variant thus prevailed in the Economic Commission in 2022. Whether it will get through in the National Council in this form is still open. The proposal should be discussed in the National Council at the latest during the 2023 autumn session.
There is more room for negotiation
In certain situations there could be more room for negotiation. “For prospective buyers, it can be worthwhile to wait,” says Tanner. But the real estate market is far from being a bargain market.
Tanner expects that the regional differences in the real estate market will become even greater this year. Prices could come under pressure, especially in rural areas. For example in the Jura or in the Emmental. However, there will be no price cuts across the board in any region, rather sideways movements.
“Depending on the region, we are talking about a maximum decline of 0.5 to 4 percent.”Ruedi Tanner (58), President of the Swiss Chamber of Brokers (SMK)
According to the President of SMK, local price corrections are possible: “Depending on the region, we are talking about a maximum drop of between 0.5 and 4 percent,” says Tanner. For a property worth one million francs, this amounts to between 5,000 and 40,000 francs.
Real estate expert Fredy Hasenmaile: “We expect a sharp fall in prices”(01:28)
Scarcity supports prices
The Hasenmaile from Credit Suisse sees things differently. He says: “Should there be a price correction, this should be observed throughout Switzerland.” Because the very low mortgage rates in the past would have raised prices everywhere. Accordingly, the rise in interest rates should reduce demand and thus prices everywhere.
In the medium term – ie in the next three years – even Credit Suisse cannot rule out price corrections in the Swiss home market. “However, these should remain manageable, since a pronounced scarcity is supporting prices,” says Hasenmaile.
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