The dream of owning a home is widespread in the land of tenants – a good part of the Swiss population would like to have their own house or apartment. Most young people also dream of owning a home: 77 percent said they had one in 2000 survey suppose they wanted to own a property later.
But in Switzerland, this goal can increasingly only be achieved at a set age – if at all. This is the result of a new analysis by Credit Suisse.
High prices, difficult financing
Real estate prices have been rising for years, and prices are being asked in many places that normal earners can hardly afford. Young people in particular do not usually earn very much.
The dream of owning a home at a young age often fails for another reason: the financing. Although mortgage interest rates are extremely low, the banks are reluctant to grant loans: the bad word is affordability rules.
Three hurdles to owning a home
Credit Suisse shows the hurdles in an invoice:
High prices: A condominium with at least four rooms now costs an average of 850,000 francs in Switzerland.
Strict funding rules: According to current rules, 80 percent of the apartment can be financed through a mortgage. The bank only lends such a loan with a (household) income of 150,000 francs a year, which is due to the so-called affordability rules. The average salary of 20 to 24 year olds is only 58,500 francs, 25 to 29 year olds receive an average of 70,200 francs.
Too little money on the side: The buyers have to pay for 20 percent of the 850,000 francs apartment themselves. This matches with 170’000 Franken – that’s a lot of money for young people.
The older the property, the greater the property: the majority of homes in the canton of Zurich are owned by people over the age of 60. The situation is likely to be similar in the rest of Switzerland.
Those: zkb
Amazingly many young homeowners
So the road to owning a home is rocky for young people. But surprisingly, 55 percent of homeowners between the ages of 30 and 40 still own their own house. Amazingly, the houses are more expensive and should actually be more difficult to finance.
But in many of these cases the hurdle did not even arise: the young homeowners came to their property through an inheritance.
Today it is mainly the elderly who own Swiss homes. And this generation of baby boomers is now gradually passing their properties on to younger generations. The easiest way to realize the dream of owning a home at a young age is certainly through an inheritance.
“That helps to increase the offer”
“Fortunately, the baby boomer generation is now increasingly passing on their single-family houses to their children and grandchildren. That helps to increase the supply,” says Credit Suisse real estate expert Fredy Hasenmaile. “Because too little is being built today to meet the high demand. The middle generations in Switzerland in particular now have a smaller chance than they used to of getting home ownership in the free market,” says Hasenmaile.
This article first appeared on handelszeitung.ch with the title: “For young people, home ownership often remains a dream – inheritance can be the solution”.
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