Anticipated Real Estate Trends for Swiss Buyers in 2025
Title: Soaring Real Estate Demand in 2025: What You Need To Know
Brace yourselves, because the real estate market is about to explode in 2025! Determined by plummeting mortgage rates, an unnecessary number of folks will be rushing to snap up properties.
In 2024, the Swiss National Bank took a scissors to its interest rate four times - slashing it from 1.75% in March to a measly 0.5% in December - which had an eye-popping effect on mortgage rates as well. For instance, the indicative rates for 10-year mortgages at 30 Swiss credit institutions currently stand at 1.55%; at the start of 2024, they were skyrocketing at 2.26%.
FYI: Dig Deeper into Mortgage Rate Drop
But just because mortgage rates are low, don't expect properties to become suddenly affordable. The increased demand will simply drive prices through the roof.
Experts wildly disagree on what this price hike will be; according to Zurich Cantonal Bank, there will be a 2% average increase, while UBS predicts a staggering 3.5% jump and Raiffeisen Bank foresees a 4% to 4.5% surge.
Second Homes: Resort Real Estate on the Rise
A peculiar trend is taking shape in Switzerland's secondary residence market, particularly in ski resorts.
The distinction between prices at low and high altitudes has snowballed, as per a new study by Wüest Partner.
As global warming becomes a reality, snowy paradises at lower elevations can no longer guarantee consistent conditions. As a result, the Swiss cantons of Valais, Graubünden, and Bernese Oberland have witnessed an increase in prices for high-altitude properties of up to 76%.
More to Come: Changes Await Second Home Owners
A new development is brewing for second-home owners, although the exact timeline remains foggy.
MPs agreed to get rid of rental value tax back in December, a move that'll lighten the burden for property owners of primary residences.
However, this relief won't extend to second-home owners, who may even face stiffer rental value taxes to makeup for the lost revenue from primary residences.
Legal Eagle: Second Home Tax Overhaul in Switzerland
The removal of rental value taxation on primary and secondary residences could signal great savings for property owners, although specifics on the impact are yet to be disclosed.
Without the burden of paying taxes based on hypothetical rental income, second-home owners could see significant savings, although the broader context - such as the Lump-Sum Taxation system for eligible foreigners - should be considered for a complete picture. Consulting local tax authorities or financial advisors might provide the most accurate assessment of the impact on second-home owners.
In 2025, the low mortgage rates and high real-estate demand might prompt individuals to invest in real-estate, but potential buyers should be aware that property prices are expected to increase significantly, with predictions ranging from 2% to 4.5%. Furthermore, policies regarding rental value taxes for second homes in Switzerland remain unclear, potentially affecting the financial aspect of such investments.
