In recent years, buying a home has been more expensive than renting, but the market for condominiums has increased significantly. This trend has been driven by a variety of factors, including low interest rates and competition in the rental market.
One major factor contributing to the increased demand for condominiums 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” in September and another rate cut in March. This led to a decrease in mortgage interest rates, making home ownership more attractive.
In addition to lower interest rates, the rental housing market has also played a role in renewed interest in home ownership. The rental market has become increasingly competitive, leading many people to consider buying 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 this increase in demand for condominiums and a decrease in transactions, property prices have continued to rise at an average rate of 3% last year and are expected to continue to rise this year according to WP. The cost of owning a home has almost doubled since the interest rate turnaround in 2022 and with recent interest rate cuts it may once again become more affordable than renting.
This shift in the housing market is causing sellers to hold firm on their asking prices as buyers may soon find it more affordable to buy than rent with further prospect of interest rate cuts that could shift the balance between buying and renting once again.
Overall, while buying a home remains expensive compared to renting, recent developments such as relaxed interest rates and competition in the rental market suggest that this trend may change soon as it becomes more attractive for people looking for long term investment or permanent residency options