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Where in Switzerland you can buy cheaper properties

You probably don’t think of Swiss housing market as being ‘cheap’, because it is not. But from time to time, it is possible to find a reasonably priced property - if you are not too picky about the location.

Where in Switzerland you can buy cheaper properties
Property prices is some tourist destinations are declining. Photo by Olya Kobruseva from Pexels

Houses and apartments are notoriously expensive in Switzerland, and out of reach for most low and middle-class people.

One major reason for high real estate costs is scarcity of land.

Switzerland is a small country with little land left to be developed and the development of whatever land is available is strictly regulated; for instance, agricultural land can’t easily be used for construction.

And as Switzerland’s land is not expandable, “residential real estate will continue to appreciate in value”, according to Stefan Fahrländer, chairman of the board of Fahrländer Partner, a real estate consultancy firm in Zurich.

There is also another reason for the shortage of homes — immigration.

“There are more and more people in the country”, said Roman Ballmer from Zurich property firm Lazi.

“Even in 2020, the year of the pandemic, immigration increased and fewer people left the country”, he said.  “For the few homes for sale, there are more and more auctions, with properties selling well above the original asking price”.

However, there are places in Switzerland where cheaper options are available right now.

The priciest housing is typically in urban centres like Geneva, Zurich, and Basel, or locations with a high concentration of multinational companies and residents, such as Zug and Lausanne.

But if you are willing to venture farther afield, you can find small municipalities where real estate prices have been dropping, even while they continue to soar in larger conglomerations mentioned above.

The real estate consultancy Wüest Partner has identified 20 municipalities where the prices of condominiums and single-family houses have fallen the most.

READ MORE: Where to find property in Switzerland for under CHF 500k

Here are some examples:

Ollon, Vaud

While properties in Vaud, especially close to the Lake Geneva region, are expensive and rising, the small municipality of Ollon is bucking this trend.

Prices of properties in this small town composed of 23 villages with a total population of 8,440 people, are 14 percent cheaper than a decade ago. Plus, if a city vibe is more your thing than a laid-back ambience of small towns, you can be in Lausanne in about 45 minutes via the A9 motorway.

Val-d’Illiez and Troistorrents, Valais 

Both municipalities are small — population 2,100 and 4,800, respectively — but are located less than an hour from the capital of Sion. The price of properties there, especially condominiums, fell by 5 percent in recent years.

Tourist destinations

If you are in the market for a secondary residence, you are in luck: prices in some tourist municipalities are also decreasing.

For instance, a single-family house in Klosters (Graubünden) costs 12.3 percent less than in prior years, and in Davos (also in Graubünden) prices dropped by 9.6 percent.

READ MORE: How can I buy a second home in Switzerland?

What if you have your heart set on a big city?

As stated above, real estate prices are through the roof (no pun intended) is Switzerland’s largest cities.

However, there is a bit of good news: while prices in some urban areas have not fallen, they have not increases much either.

This is the case of Geneva districts of Bellevue, Bradonnex, and Meinier, where cost of real estate went up very slightly by 0.2 and 0.3 percent respectively.

You can see all the prices here.
 

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Is now a good time to buy property in Switzerland?

Real estate — single-family houses as well as apartments — are not exactly cheap in Switzerland at any time. But their cost can go up or down, depending on the mortgage rates.

Is now a good time to buy property in Switzerland?

Geneva and Zurich have traditionally been — and still remain — the most expensive markets for home buyers not only in Switzerland, but among the priciest in Europe as well.

Prices are also high in Basel, Zug and Lausanne, that is, urban centres with a high concentration of multinational companies and residents.

One major reason for such high real estate prices is scarcity of land.

Switzerland is a small country with little land left to be developed, and the development of whatever land is available is strictly regulated; for instance, agricultural land can’t easily be used for construction.

And as Switzerland’s land is not expandable, “residential real estate will continue to appreciate in value”, Stefan Fahrländer, chairman of the board of Fahrländer Partner, a real estate consultancy firm in Zurich, said in an interview.

That is a reason why most people in Switzerland are tenants rather than owners.

However, while the prices of land in high-demand areas hardly ever drop (if anything, they go up), they may be more affordable if mortgage rates are really low.

For instance, at the beginning of 2021, a 10-year mortgage cost 1.1 percent on average across the country. Currently, 10-year rates stand at 2.90 percent.

“Mortgage rates have risen extraordinarily strongly since the beginning of the year”, Felix Oeschger, analyst at Moneyland, an online price comparison service, told The Local.

READ MORE: This is where you can buy cheaper properties in Switzerland

Why is this happening?

Blame it on inflation.

Although Switzerland is doing better on this front than other countries, with the inflation rate much lower than across the eurozone, prices of consumer goods —including mortgages — have risen here nevertheless

As to how long it will take for mortgage interest rates in Switzerland to fall again. “this depends on many factors, such as the further development of inflation”, Oeschger said.

“Forecasts are difficult in this regard, as is also shown by the fact that the central banks have constantly revised their inflation forecasts upwards in the past year”.

Therefore, “a further rise in interest rates “would not be out of the ordinary”, Oeschger said.

So should you take out mortgage now or wait for better times?

The natural response, based on the information above, would be to sit tight and wait until inflation — and therefore, mortgage rates — go down.

However, while the increase in rates between last year and now may seem steep, Oeschger points out that “if you look at Swiss mortgage rates over a slightly longer period of time, for example over the last 15 years, they are only slightly above average”.

While this may dissuade potential home buyers from purchasing now, it may, in fact, be a good time to do so if you want to avoid future increases.

“If it is urgent to take out a fixed-rate mortgage, I would rather do it now than wait”, he said.

READ MORE: EXPLAINED: How to save on your mortgage in Switzerland

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