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REAL ESTATE

Residential property prices continue to climb in Switzerland

The average cost of properties in Switzerland increased by 2.5 percent in 2020, according to The Swiss Residential Real Estate Price Index (IMPI).

Residential property prices continue to climb in Switzerland
Property proses are going up in Switzerland. Photo by AFP

The 2.5 percent annual price increase for 2020 corresponds to the rate of change between the annual average for 2020 and that for 2019.

The annual average is the arithmetic mean of the four quarterly indexes of the calendar year.

Compared to the same period of 2019, this represents an increase of 3.1 percent, as reported by the Federal Statistical Office (FSO). 

Prices increased on average 2.8 percent for single-family homes and 2.2 percent for owned apartments.

In the fourth quarter of 2020, the increase in IMPI was 2.3 percent compared to the previous quarter. Prices increased both for single-family homes (+ 1.5 percent) and for owned apartments (+ 3.1 percent). 

Price increases were recorded across Switzerland, regardless of the geographical location.

The findings correspond to those of an earlier study showing that housing in Switzerland has become more expensive during the coronavirus pandemic.

While many experts feared that real estate market in Switzerland would collapse during the health crisis, the opposite has happened. Rents, as well as purchase prices for houses and apartments have risen by 5.5 to 5.6 percent. 

READ MORE: What does the coronavirus mean for Switzerland's property market?

That particular study, by ImmoScout24 Swiss Real Estate Offer Index, indicated that both owned and rented housing is most expensive in the Lake Geneva region.

 

 

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PROPERTY

Can foreigners apply for (and get) a mortgage in Switzerland?

If you are a foreign national and want to buy property in Switzerland, you may be wondering whether you are eligible for mortgage. The answer depends on several factors.

Can foreigners apply for (and get) a mortgage in Switzerland?

The most important condition for being able to obtain a Swiss mortgage is your residency status. So the question should be not whether you qualify for a mortgage but, rather, if you can purchase property in Switzerland in the first place.

Logically, if you are allowed to buy a house or an apartment in Switzerland, then you can apply for a mortgage as well.

Who can and can’t buy a house / get a mortgage?

A citizen of an EU / EFTA state can freely purchase real estate (home or land) in Switzerland. This applies to both primary residence and holiday homes.

The same is true for third-country citizens, say US or UK nationals, who have a valid permanent residency B or C status — there are no restrictions placed on them either.

However, rules are in place for people from outside Europe who don’t have either of the two above-mentioned residency permits.
They will need a permission to purchase housing in Switzerland — a measure intended to prevent Swiss properties from falling into foreign hands.  

Additionally, they can only buy a house which will be used as the primary residence — this means that they can’t buy it as an investment and rent it out.

And if you are a cross-border worker in Switzerland (G permit), you can buy a second home in the vicinity of your  place of employment without authorisation. However, you are not allowed to rent out this property for as as long as you work in the region as a cross-border commuter.  

Conditions are even stricter if you a foreigner living abroad — rules for such purchases are set out in a law called Lex Koller and are quite complex.

Unless you are looking to buy holiday homes in Appenzell Ausserrhoden, Bern, Freiburg, Glarus, Grisons, Jura, Lucerne, Neuchâtel, Nidwalden, Obwalden, St. Gallen, Schaffhausen, Schwyz, Ticino, Uri, Vaud and Valais, you will need a special permission as well.

READ MORE: ‘Lex Koller’: What are Switzerland’s rules for foreigners buying property?
 

Where can you ask for authorisation to buy a house?

If you are among those who need a special permission to own a house, you should apply for permission to cantonal authorities in the municipality where the property located.

Page 13 of this PDF document indicates contact addresses for each canton.  Officials will indicate what paperwork you need to submit for consideration of your case.

What about mortgages?

Needless to say, if your application is rejected, you will not be given a mortgage either.

If it is approved, then you can apply in pretty much the same way as Swiss citizens do, though you will be asked to provide additional documents, such as your work / residency permit, for example, along with the canton’s authorisation.

From then on, it is up to you and your financial abilities to choose the mortgage that suits you best from among several types available in Switzerland, such as SARON and LIBOR mortages, which are detailed here:

EXPLAINED: What is Switzerland’s ‘SARON’ mortgage?
 

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