| RAMZI CHAMAT | OAKS GROUP SA
The Swiss real estate market is renowned for its stability and attractiveness. However, over the past five years, some cities like Zurich and Geneva have seen their prices rise dramatically. This phenomenon is due to several factors: strong demand, limited supply, and rising rents. Despite these increases, 2024 could represent an excellent opportunity to invest before further price increases. This article provides a detailed analysis of the market in Zurich and Geneva and explores why buying real estate today is a strategic decision.
In Switzerland, Zurich and Geneva are leading economic hubs, attracting businesses, expatriates, and investors. Their economic dynamism and high quality of life create constant housing demand. However, limited supply and rising prices make buying property in these cities increasingly challenging. Over the past five years, Zurich has experienced a 25% real price increase, while Geneva has seen a 10% rise.
Despite these increases, several factors make real estate purchases more relevant than ever. Falling mortgage rates, favorable economic forecasts, and market trends present a strategic opportunity. In this article, we’ll explore the key trends and explain why now might be the best time to invest for long-term financial stability.
The main driver of price increases in Zurich and Geneva is the housing shortage. Construction has not kept pace with demand, and new urban planning regulations have further limited the development of new projects. Additionally, demographic growth and international appeal put constant pressure on these markets.
In Zurich, demand far exceeds supply, making home ownership increasingly difficult. Over the past five years, property prices have risen by 25% in real terms. Experts estimate that only 15% of the population can currently afford to buy property, turning Zurich into a luxury real estate market. Meanwhile, rents have increased by 25%, further pressuring residents.
While Geneva's price increase is less pronounced than Zurich’s, the city has still seen a 10% rise over five years. Prices have stabilized slightly over the past four quarters, but rents have grown faster than household incomes, making renting less attractive and prompting more households to consider buying.
Despite soaring prices, 2024 offers a unique window of opportunity to buy real estate, thanks to the Swiss National Bank’s (SNB) recent decision to lower its policy rate to 1.0%. This reduction has led to a significant drop in mortgage rates, easing access to real estate financing.
Fixed mortgage rates for 5- and 10-year terms are currently at their lowest levels in two years:
These favorable conditions allow buyers to secure advantageous rates and ensure stable monthly payments over the long term. Additionally, SARON-indexed mortgages, based on interbank rates, have become more appealing, with an initial rate of 1.85%.
Experts predict that while Zurich’s price growth may slow, Geneva could see further price increases in the coming years. Buying now allows investors to stay ahead of potential market overheating and benefit from future upward trends. Furthermore, purchasing property today enables buyers to capitalize on gradual asset appreciation over time.
Real estate remains a safe haven investment, especially in times of economic uncertainty. Internationally, Zurich and Geneva rank among the most stable property markets. Zurich is currently third in global real estate bubble risk, behind Tokyo and Miami, demonstrating its attractiveness to investors.
In Switzerland, each canton applies its own tax rates on real estate gains, which can affect the profitability of a sale. However, good tax planning, including enhancing property value through home staging, can significantly increase the final sale price.
Home staging involves temporarily furnishing and decorating a property to maximize its appeal to potential buyers. This technique is especially effective in competitive markets like Zurich and Geneva, where a well-presented property can attract offers quickly and achieve the best possible price.
While mortgage rates are currently favorable, the market is evolving rapidly. A potential interest rate increase in the medium term could make financing more expensive. Additionally, the housing shortage will only intensify competition among buyers, likely driving prices even higher.
Investing in property in 2024 represents an opportunity not to be missed for those seeking long-term financial growth or to build wealth. Securing a property now allows buyers to avoid future price hikes and benefit from favorable financing terms.
The real estate markets in Zurich and Geneva are evolving rapidly, with rising prices and increasing demand. Despite these challenges, 2024 offers a rare opportunity to buy, thanks to low-interest rates and a slight rebalancing of supply. Acting now allows buyers to secure favorable financing and position themselves ahead of future price increases, especially in Geneva.
Investing in property in these two cities remains a solid and strategic choice for long-term success. By purchasing today, buyers can secure valuable assets, shield themselves from rent volatility, and capitalize on future market growth. Now is the time to make the leap and acquire property in Zurich or Geneva before these favorable conditions disappear.