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Buying Swiss property set to become better value than renting

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Buy or rent? In Switzerland, it's pricy either way. Keystone / Peter Schneider

Falling mortgage rates and rising rents could lead to a situation favouring buyers by early 2025, a UBS study predicts.

According to the bank’s study, published on Monday, property buyers currently face higher financial burdens than tenants of a similar property. Annual costs for a four-and-a-half-room owner-occupied flat with 110 square metres of living space were some CHF32,500 ($36,238) in the first quarter of 2024, while the annual rent for such a flat was CHF30,500 – a property mark-up of 7%.

In the summer of 2023, this surcharge was 16%. According to current forecasts, a person who took out a long-term mortgage at that time would have to bear additional costs totalling almost CHF50,000 by 2033.

+ Golden cages and rising rates on the Swiss housing market

But thanks to the fall in mortgage interest rates, the property premium is now significantly lower than in summer 2023. And by the beginning of 2025, it should fall by 3%, UBS says.

The main drivers of this trend are the two key interest rate cuts still expected from the Swiss National Bank (SNB).

The fall in the property premium is widespread in Swiss regions. In cantons Bern, Solothurn, Aargau, Schaffhausen and Thurgau, it is already below 5% in many places. In some parts of the cantons of Vaud, Fribourg and Valais, buying a home is already cheaper than renting. On the other hand, mountain regions have the highest property premium.

Adapted from French by DeepL/dos

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