Swiss shy away from buying own homes

Urban sprawl is affecting Geneva as more people flock to the cities Keystone Archive

Fewer Swiss are choosing to buy their own homes despite low interest rates and attractive financing options.

Real estate analysts at Switzerland’s largest bank, Credit Suisse, said they were “surprised” by a dip in building applications for single-family dwellings.

The Swiss typically tend to rent rather than buy property, but low interest rates in the mid-1990s made investing in real estate an attractive option. However, homeownership has been dropping off recently.

The boom in home buying has “passed its peak,” Credit Suisse said in a survey of real estate published on Thursday. It expects residential construction to remain weak in the next two years.

Nation of renters

Switzerland has traditionally been a nation of renters. Just 30 per cent of Swiss are homeowners while the rest are tenants.

One reason for this is the high standard of rented accommodation, says Thomas Oberle of the Swiss Homeowners Association.

He told swissinfo that the Swiss also preferred renting because it avoided the complications involved in owning property and made it easier to move.

He added that current laws penalised homeowners because the money they “save” from not having to pay rent is treated as income and taxed accordingly.

Housing shortage

The authors of the Credit Suisse report say the reason for the dip in house buying is likely to be a result of demographics. But they add that the lack of demand for new homes is difficult to explain given the tight housing market.

They found that demand for living space in Zurich and Geneva has “risen particularly fast” – so fast, in fact, that the housing situation in those two cities is “so overstretched that it can no longer be referred to as a functioning market”.

The authors say “there is a definite trend towards a return to the cities”, with the notable exception of Basel, which has seen is population drop in recent years.

The drift towards Zurich and Geneva has led to high demand for office space, which has long been in short supply, leading to exorbitant rents.

However, the study author’s say the economic slowdown has pushed down office occupancy rates, and rents are now starting to drop as a result.

by Samantha Tonkin