How Much is Your Property Worth?

Residential real estate is in demand in Switzerland. Mortgage rates are at historic lows (about 1% for a 3M Libor Mortgage), and are likely to stay that way for a while. The population is increasing, largely thanks to a relatively strong economy and a net influx of people.

New homes are being built at a record rate, but demand is outstripping supply, especially in the popular Lake Geneva region, and increasingly in the Zurich region too. The result is: rising property prices and an active property market.

But, price trends vary enormously by region and type of property, and it is difficult to generalise about property prices across the whole country. For example, for the first time in many years, house prices in the Lake Geneva region although rising, rose less than the national average.

To work out what your property is worth now, we have produced a price calculator, based on statistics from the Swiss National Bank and Wüest & Partners: Have a look at price trends in your area and work out how much your real estate investment is worth now. We keep our figures up to date, so you are guaranteed to have the latest information.

The most sought after properties are detached houses, and historically in Switzerland, these cost about 8 times average annual household income. This makes owning a home in Switzerland expensive by international comparison. (In the UK, a home only costs 5.5 times average income)

What makes homes still affordable though, are the low mortgage rates of around 1% (well below the long term average of 5%), and the long terms of these mortgages (100 years is common). On the down side, what prevents many people from becoming property owners is the legal requirement of a 20% deposit as an initial down payment on all property purchases. It is rare (though apparently possible) to find a mortgage for more than 80% of the property price. A fairly modest house in the Geneva region costing 2 million francs will therefore require a whopping 400'000 CHF down payment. If you don't already have a house to sell, then you need to be a very good saver!

Another important factor is that Switzerland is changing rules governing the sale of real-estate to foreigners, making it much easier for EU nationals and others to purchase property in Switzerland. Well heeled immigrants tend to want to purchase their own property, and there is the added factor of second home ownership, especially popular in alpine regions.

Outlook for 2012

2011 saw some dark clouds over Europe, and Switzerland isn't immune from this economic storm. Threats to the Euro and problems within the banking sector are impacting the Swiss economy. The Swiss franc has risen to scary levels, and the Swiss national bank has had to intervene - effectively printing money to fix the exchange rate with the Euro. The strong franc makes real-estate even less affordable for foreigners, and it's more tempting for locals to sell up and move across the border. So far the housing market has held up well, but 2012 is sure to be flat at best.

On the plus side, there is evidence that even die-hard renters are realizing that with such low interest rates, buying can in fact end up cheaper than renting. This means that there is perhaps a new category of buyers who previously would never have considered entering the market. Interest rates will surely stay low whilst the Swiss franc is under threat of rocketing higher, and unemployment is only 2.8 percent - a figure which is likely to attract workers from across Europe. Evidence shows that there are still supply shortages despite sustained building activity, and it is still practically impossible to find a place to rent in Geneva or Zürich.