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Anyone who wants to buy a single-family home in Zurich must have an annual income of over half a million. This is what a new study shows.
According to the real estate consulting firm Iazi, real estate prices rose by 4.9 percent last year. “This is because Switzerland is very attractive and generates enormous demand – also from abroad,” says real estate expert Donato Scognamiglio. The main driver of the high prices is population growth, which is largely driven by the immigration of highly qualified workers. At the same time, supply is scarce.
Iazi has calculated the prices for an average single-family home (140 square meters, good condition, good construction quality). In Zurich this costs over three million Swiss francs. In Bern there are almost two million.
Legend: Prices for single-family homes are immensely high in cities. SRF/IAZI
In order to receive a mortgage from a bank, the buyer must be able to prove that they are sufficiently financially secure. In addition to the usual 20 percent equity, a household in Bern must have an annual income of over 300,000 francs in order to meet the affordability guidelines for the model home. If you don’t meet these requirements, you won’t get a mortgage.
Legend: Many people are denied the dream of owning their own home like here in Schönenwerd/SO. Keystone/Archive/ALESSANDRO DELLA BELLA
If you want to buy the same model house in Zurich, you have to earn over half a million. Iazi expects a loan-to-value of 80 percent, an imputed interest rate of 4.5 percent and 1 percent additional costs.
If you are willing to commute, drive out into the urban areas and make certain compromises, you can still find an affordable house.
The Swiss median wage is 80,000 francs per year. If both people in a two-person household work full-time (=160,000 francs), almost half of the income in Bern is still missing to meet the required affordability guidelines.
Legend: In Zurich you have to show an income of more than half a million to get a mortgage. srf/iazi
This means that for many people, the dream of owning their own home is becoming far away or in rural areas. Those willing to buy there can have more hope for cheaper properties. “If you are willing to commute, drive out into the urban areas and make certain compromises, you can still find an affordable house,” says the real estate expert.
For a single-family home like the example mentioned, an income of at least 100,000 francs is currently required in almost all of Switzerland. Things will only get cheaper when more properties come onto the market. As long as homeowners can still afford the increased interest rates of almost three percent – which corresponds to a tripling of interest costs within two years – and do not necessarily have to sell, house prices will not fall.
It will never be cheap to buy a house in Switzerland.
Added to this is the positive economic environment: inflation is low by international standards, the economy is growing and there is practically full employment – if you trust the numbers, Switzerland is doing well.
“It will never be cheap to buy a house in Switzerland,” says Scognamiglio. At some point it will simply no longer be more expensive.