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PROPERTY

What you should know if you’re considering buying a home in Switzerland

Thinking of buying a property in Switzerland in the current market but not sure what to expect? The Local spoke with property experts and recent home buyers to find out their experience and tips.

Published: 9 February 2023 16:36 CET
Updated: 11 February 2023 13:45 CET
Pictured is a house and keys.
What should you know if you're thinking about buying a home in Switzerland? Photo by Tierra Mallorca on Unsplash

While house ownership is an aspiration for many, it is always a complex decision – especially now. With so many extraordinary developments in the recent past – higher mortgages, the tight supply situation, and conflict in Europe it is even more difficult to analyse the property market and figure out the what, where, when, and how of the investment process.  

The cost of a mortgage has shot up recently. The average advertised interest rate is 2.5 percent per year for a five-year fixed-rate mortgage and 2.76 percent for a 10-year fixed-rate mortgage. In a recent report,  moneyland.ch CEO Benjamin Manz stated that, on average, the cost of a 10-year fixed-rate mortgage has nearly doubled from what it was at the start of 2022. 

The SARON (Swiss Average Rate Overnight) rate, considered a higher-risk variable rate, has also significantly increased. SARON is the average interest rate for loans issued in Swiss Francs with a maturity of one day (overnight).

READ ALSO: Switzerland sees dip in property prices and rents

‘Not a bad time to buy property’

Buyers in Switzerland who have recently invested in properties already feel the higher interest rate effect. As a result, some are considering reworking their mortgages.

“I took a SARON mortgage with an interest rate below 1 percent. However, this has already gone far above 1 percent,” a house owner who recently bought a property in Wetzikon (canton Zurich), Switzerland and who wished to remain anonymous, told us.

“With the current uncertainties, I also do not want to risk it much. Therefore, I am talking to the banks about converting a part of the mortgage into a fixed rate.”

Does this all mean that buyers need to wait and watch before investing in a house?

Richard Auf der Maur, the president of the Property Owners Association, suggested that even within the current market, it is not the wrong time to buy a place in Switzerland.

Keys to a home.

Keys to a home. Photo by Jozsef Hocza on Unsplash

“From a pure market timing perspective, it’s certainly not a bad time to buy property in Switzerland,” he told The Local. “The massive price increases during the pandemic cooled off considerably in the last months, and the higher mortgage rates limit the buyer pool and thus prices.”

However, he suggested that buyers really evaluate the property well before honing in on anything.

“A thorough valuation of property values is key,” he said. “A lot of sellers still have unrealistic price expectations stemming from Covid times. Also, financing is crucial: higher mortgage rates increase holding costs considerably, and comparing different offers is advisable.”

According to Auf der Maur, the good part is that the market environment is returning to healthier space with more realistic prices.  

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

Another real-estate expert suggested it might be worth waiting a while before investing because the market for single-family homes is cooling off.

“There may be more room for negotiation for prospective buyers in the future. The market is on the move,” Viola Thiele of SVIT Schweiz said.

 Thiele said that prospective buyers need to keep an eye out – not only on the purchase price and additional investment requirements – but also the increasing operating and finance costs.

“In recent years, these costs of living had not played an important role,” she said. “But that is now changing with rising interest rates and rising ancillary costs.”

Apartments

Many people dream of finding a home in Switzerland. Photo: Pixabay

‘Our family was growing’

For many buyers, house ownership is an emotional experience centered on family and finding a sense of belonging rather than just an investment. Therefore, in these cases and with thorough calculations and proper planning, it still makes sense to take the plunge and buy a home.

“For me, buying a home was driven mostly by family reasons,” Ashish Sharma, clinical development lead at a pharma firm, told The Local. 

“Our family was growing, and we needed a bigger space. So it was clear from the beginning that we would buy a property as and when we could. But, of course, we had our finances, location, and space requirement figured out even before visiting the houses.”

Sharma bought a property in Aargau Canton in November 2022. The mortgage rate has increased since then.

“We took the SARON rate, and based on the historical calculations, it made sense to go for SARON than the fixed rate,” he said. “However, even though we can save a bit with this market change, I am not sure what would happen in the near future.”

READ MORE: Swiss mortgage rates ‘climb drastically’ with more hikes on the way

A few tips for buying a house in Switzerland:

  • Research. Start your search about your house and location preference much in advance
  • Have a budget in mind
  • Check with banks how much mortgage you would be eligible for
  • When you like a house, ask different banks for the valuation of the property
  • Connect with other real-estate companies/agents
  • Prepare your list of questions to ask the real estate agents
  • Evaluate your risk appetite. Get an idea about SARAON and fixed interest rates
  • Search thoroughly throughout the rooms, garden areas, and cellar systems of a home
  • Read the property document carefully to spot any hidden costs
  • Calculate renovation costs, if required, in overall finance 

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OPINION AND ANALYSIS

OPINION: Switzerland is a better place than 20 years ago, but much can still improve

From attitudes towards foreigners and improvements in work-life balance, Clare O'Dea examines how Switzerland has changed over the last 20 years and how it hasn't ('the Swiss still don't know how to queue'). Her new book All About Switzerland is now available - details below.

Published: 18 May 2024 10:49 CEST
Updated: 18 May 2024 14:45 CEST
OPINION: Switzerland is a better place than 20 years ago, but much can still improve

In the 20 years that I’ve been writing about Switzerland, I’ve tended to focus on one part of the picture at a time. Standing back from the canvas, I can see that there has been a pretty positive evolution in the country over that time.

The change has happened in measurable ways – an extra 1.6 million inhabitants, for one thing – but also in ways that are difficult to define. What I notice is more tolerance, more questioning of the norm, and more focus on fairness.

Some of this has come about through facing up to the wrongs of the past, whether that’s the historical abuse of children in the care system, the denial of the vote to women for so long (until 1971!), or the seizing of dictators’ assets.

Although it takes a painfully long time, mistakes and injustices do eventually come to light and there has been an appropriate reaction of self-recrimination and reflection towards these wrongs, and a willingness to make amends. All this has made Switzerland a better place.

READ ALSO: Are foreigners to blame if they find the Swiss unfriendly?

The foreign factor

When it comes to foreigners, there has definitely been in a positive change in attitudes towards immigrants from the countries of the former Yugoslavia. I detected very strong prejudice against this group in my early years in Switzerland. The second generation has now grown up here and found their place in all walks of Swiss life.

Unfortunately, asylum seekers have borne the brunt of xenophobia in recent years, with the notable exception of Ukrainians fleeing Russia’s war of aggression, who were granted special treatment. Switzerland has welcomed more than 80,000 Ukrainians since 2022, about a quarter of whom have since left the country.

Several cantons, notably Neuchâtel, have led the way in extending more rights to foreign residents and making it easier for them to integrate or obtain Swiss nationality. But naturalisation rates are still low, which is a pity for the Swiss, if only they would realise that.

When I first came to live in Switzerland from Ireland, I benefitted from the newly-valid agreement on the free movement of persons with the EU and EFTA countries. Since then, hundreds of thousands of Swiss and EU/EFTA nationals have been free to move countries for work, adventure, love or retirement.

Those immigrant workers have been a boon to the Swiss economy, which has one of the highest levels of GDP per capita in the world. Travel wise, Switzerland is well and truly integrated into Europe, joining the Schengen Area in 2008.

OPINION: The true signs you are becoming more Swiss than the Swiss

Family matters

Just this week, my twin daughters, who are Swiss citizens, received their first ever ballots for the next federal and cantonal votes on June 9th. Apart from reminding me of the fact that foreigners in Switzerland are largely excluded from the democratic process, this landmark also reminds me of how times have changed in relation to maternity rights.

It is hard to believe that Swiss women did not have statutory paid maternity leave until 2005. Voters had rejected the notion that women should have guaranteed paid leave after giving birth on four previous occasions – 1974, 1984, 1987 and again in 1999.

For all those years, maternity benefits were left up to employers to dictate, which was clearly not enough protection for all mothers. Today, new mothers are entitled to 14 weeks statutory leave but most employers offer more than that. Since 2021, fathers in Switzerland have been entitled to two weeks paternity leave.

There’s definitely room for improvement in the area of work-life balance for families, and there are some ideas in the pipeline, including state subsidies for childcare. With a fertility rate of 1.39 births per woman in 2022, Swiss-born babies is not where population growth is coming from.

Taking turns

One issue that seems almost unfixable in Switzerland is the high cost of healthcare. The country has the second most expensive system in the world, after the United States. Most of the cost is shouldered by households, directly or indirectly.

Whatever about the cost, the care itself is excellent and relatively well staffed. With one in three healthcare workers holding a foreign diploma, including a large proportion of cross-border workers the system is heavily reliant on non-nationals.

On June 9th, Swiss voters will get to decide on two people’s initiatives, both of which aim to curb the cost to consumers. My impression in the past was that the Swiss were reluctant to vote for freebies for themselves. But this may be the right timing for these proposals, considering that voters accepted an initiative in March of this year to increase the state pension by 8 per cent.

When it comes to daily life in Switzerland, politeness and order is the rule, with one exception – the Swiss still don’t know how to queue! I had this experience just the other day waiting outside a small museum that was only letting in a few people at a time. If you can cope with that fundamental flaw, the rest is easy.

All About Switzerland

A dynamic, up-to-date guide to Swiss society and current affairs, All About Switzerland ebook features a selection of 29 articles by Clare O’Dea. The articles were first published by The Local Switzerland from 2022 to 2024. The ebook is available on Amazon, Kobo and other retailers.

 
 
 
 
 
 
 
 
 
 
 
Photo: Charly Rappo

Originally from Dublin, Clare O’Dea has lived in Switzerland for two decades. Author of fiction and non-fiction, Clare has had a varied media career in Ireland and Switzerland, with a stint in Russia. She has contributed articles to The Local Switzerland since 2022. Her new book All About Switzerland: Selected articles from The Local Switzerland is Clare’s fourth and is available as an e-book online.

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