PROPERTY – SWITZERLAND – PRICES CONTINUE TO RISE

It is well known that the best investment in the world in terms of returns remains rental property in Swiss cities such as Geneva, Zurich, Zug or Lausanne… provided you have the means… substantial means…

When looking for a return on property investment, there are many countries where property prices are ‘normal’ or affordable, but it is essential to operate within a sound framework and a legal environment that protects you from unpleasant surprises; of course, there are many such countries and generally everything runs smoothly.

In Switzerland, this isn’t even a question, as the investment is so secure; so even if returns are lower, the country remains very attractive to investors

Why? Explanation:

• A vacancy rate so low as to be negligible
• Purchase prices and rents that keep rising
• Tenants who are willing to do anything to secure the ‘Holy Grail of flats’ ahead of 150 other solvent applicants
• Low yields, but 99.999% secure because a tenant in Switzerland would NEVER dream of stopping their rent payments; once out, they would never find another rental again… 

Nevertheless, this ‘idyllic’ situation, as seen from the outside, also has its drawbacks.

Indeed, it has become absolutely impossible for the vast majority of residents to hope of ever owning their own home… let alone acquiring an investment property.

This situation is artificially maintained so that only certain individuals or institutions control the entire Swiss property market, so that workers cannot invest their second pillar savings, so that they remain dependent on their rented accommodation, and above all so that they do not achieve financial independence through investment returns. To our knowledge, Switzerland is one of the very few countries in the world where this situation is deliberately engineered.

Fortunately, if you look beyond certain regions (with remote working potentially helping) and if you have the right connections, it is still possible to find high-quality, affordable properties that can also serve as income-generating investments… We will return to this topic shortly in a new article...

This graph clearly illustrates the rise in property prices by property type

Here we see the rise in prices by type of municipality; this graph is very telling

For further details on property prices in the world’s most expensive country, the article below is short but perfectly clear.

You’ll need to fork out 500,000 francs for a one-and-a-half-room flat in Geneva and Zug

In Switzerland, housing prices vary greatly by region, notes Homegate.ch. As for rents, those for 3.5-room flats have skyrocketed.

Finding somewhere to live in Geneva still requires a substantial budget compared to other cantons.

It is no secret that property prices in Switzerland vary greatly from region to region. In its latest report, the property sales and rental platform Homegate.ch analysed the listings published on its site to examine these differences more closely. The findings show, in particular, that with a budget of 500,000 francs, those looking for their dream home can afford a flat with at least 4.5 rooms in the cantons of Uri, St Gallen and Jura, whilst they would have to make do with a modest 1.5-room flat in the cantons of Geneva and Zug.

Rising purchase prices

The canton at the head of the lake thus takes the prize for being the most expensive, as even with a budget of one million francs, you can barely afford a 3.5-room flat in a block of flats, notes Homegate. The second most expensive canton is Zug, where a four-room flat sells for the same budget, whereas in many other cantons such as Neuchâtel, Valais or Solothurn, you can find a seven-room flat for the same price. For a five-room flat, you would need to spend 1.5 million francs in Geneva and Zug, whilst for the same budget, six-and-a-half-room flats are available in other cantons.

Disparities are also evident within the cantons, Homegate points out: “For example, in the canton of Zurich, 500,000 francs will buy a three-and-a-half-room flat in some municipalities, whereas in others, this amount is barely enough for a one-and-a-half-room flat.” Purchase prices rose in all cantons between 2010 and 2020, for both flats and detached houses. During this period, purchase prices rose much more sharply than rental prices.

2,000 francs for a three-room flat

Regional differences are also reflected in rent prices, according to Homegate. “If you have a fairly tight budget of 1,000 francs, you can only afford a three-room flat in the canton of Jura,” the rental platform explains. For the same budget, 1.5-room or 2.5-room flats are available in most cantons. With a budget of 2,000 francs, “it is entirely possible to live in a 5-room flat in many cantons. In the cantons of Geneva and Zug, you’ll have to make do with a three-room flat, and in Zurich, a four-room flat.” From 3,000 francs, you can rent a six-room flat or larger in most cantons, but not in Geneva or Zurich.

Rents have also risen (by between 6% and 10%) for all apartment sizes between 2010 and 2020, across all cantons. In expensive cantons, this increase was felt most keenly in rents for 3.5-room flats, whilst in affordable cantons, it was 5.5-room flats that became more expensive.

Sources:

https://www.20min.ch/fr/story/il-faut-debourser-500000-frs-pour-un-appart-de-1-5-piece-a-geneve-et-a-zoug-570317937990
https://www.bfs.admin.ch/bfs/fr/home/statistiques/catalogues-banques-donnees/graphiques.html?dyn_prodima=901499