The cost of buying a home has been higher than renting in the past two years, yet prices have not decreased. Recent interest rate cuts by the National Bank have increased demand for condominiums. According to Wüest Partner (WP), there has been a 7% increase in search subscriptions since the middle of last year, indicating that more people are considering purchasing their own homes.
One reason for this surge in interest is the relaxed interest rate situation over the past six months. Following a series of interest rate increases, the Swiss National Bank (SNB) made a “zero decision” for the first time in September, followed by another rate cut in March. This has led to lower mortgage interest rates, making home ownership more appealing.
In addition to lower interest rates, the rental housing market has also contributed to the renewed interest in home ownership. With increasing competition in the rental market, many are now considering purchasing a home instead of renting. While there may not be a shortage of homes on the market, high property prices have made it difficult for potential buyers to make a purchase.
Despite an increase in advertised condominiums and decrease in transactions, property prices have continued to rise. Condominium prices increased by 3% last year and are expected to continue rising this year. The cost of owning a home has almost doubled at times since the interest rate turnaround in 2022, but with recent interest rate cuts, it may once again become more affordable than renting.
This shift in the housing market has caused sellers to hold firm on their asking prices as buyers may find it more affordable to buy than rent with further interest rate cuts on the horizon. With this prospect of further cuts, the balance between buying and renting a home may shift back towards home ownership once again.