Since 2016, around 300 to 400 single-family homes have been demolished in the canton of Zurich every year, and the trend is rising. (Image: Shutterstock.com/Footageclips)
In the canton of Zurich, there is a shortage of single-family homes. The number of demolitions is likely to exceed new construction activity for the first time in 2022. 70% of the houses are underoccupied, only one person lives in every seventh. According to the Zürcher Kantonalbank, growth in real estate prices will weaken slightly from a high level.
The dream of buying a house moves even further into the distance. Anyone who already owns a single-family home will not give it up that easily – even if the children have long since left the house. And if one does come onto the market, there is a growing threat of demolition. In 2022, for example, the annual demolitions of single-family homes in the canton of Zurich are likely to exceed new construction for the first time – the stock is threatening to decrease. This is the result of a current study by the real estate research department of the Zürcher Kantonalbank (ZKB).
Hardly any change of hands
A look at their occupancy also shows that EFH hardly ever change hands: over 70% of all EFH in the canton of Zurich are under-occupied. Under-occupancy is considered to be when the number of rooms is greater than the number of people plus 1. Only one person lives in every seventh house, mostly seniors. Wealth certainly also plays a role in under-occupancy – according to the ZKB real estate experts, for example, there are an above-average number of large houses on the Gold Coast. But an important factor is also that people stick to their own house, even though it no longer corresponds to their current living situation. Emotional aspects, financial stumbling blocks or the fact that it is not always easy to find a suitable and attractive alternative living space – all of this can lead to a decision to sell being postponed.
Nevertheless, the time to sell a single-family house could not be better at the moment, as demand is higher than ever. “Homeowners throughout the canton of Zurich have more leverage and can use the situation to their advantage so that moving is less difficult,” explains Ursina Kubli, Head of Real Estate Research at Zürcher Kantonalbank. For example, you can agree with the buyer that the handover of the property will take place later. If the own funds allow it and you are not yet ready to sell, the house can also be rented out for the time being.
Up to 400 single-family homes are demolished every year
But even if more single family homes come onto the market in the coming years with the generation change – some of them are threatened with demolition. According to the study, around 300 to 400 single-family homes have been demolished each year in the canton of Zurich since 2016, and the trend is rising. 74% of these demolitions affected houses with a turnaround – even though these make up less than half of the total stock. Houses in the city of Zurich and on both banks of the lake were particularly affected. In the city of Zurich, for example, more than 5% of the original stock of detached single-family homes has disappeared since 2016 – more than 6% in Herrliberg, Meilen and Thalwil.
According to the ZKB real estate experts, it should not come as a surprise that houses that have been moved around in attractive locations are particularly affected by demolitions: Due to the utilization reserve and the rising land prices, densification is particularly obvious – especially if a comprehensive renovation is pending anyway. It is likely to be particularly difficult for private buyers to gain a foothold here, as they often find themselves in direct competition with more solvent institutional investors.
Semi-detached house: Difficult to demolish, but possible
According to the study, the remaining demolitions affected almost equally semi-detached and terraced single-family houses (11% and 15% respectively). Here the demolition and the new construction process is usually a little more difficult than with the freestanding ones – but it is not impossible. Buyers of older semi-detached houses should be aware that the neighbors could soon implement their own construction plans. Terraced single-family houses, on the other hand, are usually not demolished individually, but rather the entire building complex.
Three quarters of all terraced single-family house demolitions took place in the city of Zurich. Here it is above all the cooperatives that are replacing their own older terraced housing estates in order to create even more affordable living space. A good example of this is the “Am Glattbogen” settlement of the ASIG cooperative: in 2016, they replaced 43 terraced single-family houses with 13 multi-family houses with a total of 165 apartments.
Single-family house is becoming obsolete
GIS analyzes by the Zürcher Kantonalbank show that this is a sustainable trend: almost 70% of all demolitions of single-family homes since 2016 have been new multi-family houses, and the figure for terraced single-family houses is even 98%. Only in a total of 31% of cases was a detached house replaced by the same or several new detached houses. “The single-family home – especially if it’s a turnaround – is increasingly becoming obsolete, because it’s becoming less and less contemporary in terms of space and resource demands,” says Ursina Kubli.
This increasing substitution is therefore likely to continue: not only because of the brisk demand for new construction by cooperatives, but above all in view of the increasing age of single-family home owners. The forthcoming change of generations will further accelerate the demolitions, because even if the heirs would like to keep the house in the family, it is often difficult to pay off the remaining descendants.
No end to the price increase in sight
Not only the dwindling supply makes buying a house difficult, but also the high prices. Real estate price dynamics are likely to weaken slightly this year, but from a very high level. The real estate experts at Zürcher Kantonalbank are still expecting price growth of 5% in the canton of Zurich (previous year 9.3%) for the current year and 4.0% throughout Switzerland (previous year 7.5%). And the notorious undersupply of residential property is likely to remain for the time being – despite higher energy prices and possible SNB interest rate hikes.
Surcharge for city dwellers
Incidentally, a particularly high price increase can be observed for second homes. Since the end of 2018, costs have risen by 17% here, well above the rest of the market (+12%). If the budget is not enough for a single family home on the outskirts of town, then at least for a small holiday apartment, some people think. However, the experts point out that city dwellers should exercise some caution here. Because: For a second home in the country, they pay on average 19% more than locals, in tourist communities it is even 26% more, according to the analysis by the Zürcher Kantonalbank. This unequal treatment can be partly explained by the market restrictions imposed by the Second Homes Act. But at least for rural areas it can be statistically proven that there is an additional “city surcharge”: In rural communities not affected by the Second Homes Act, this price surcharge is still 6% compared to the apartment of a local. It is therefore worth researching the local price level in advance. “By the way, provincials looking for a second home in the city don’t pay a surcharge: Here, the prices are the same for everyone,” add the ZKB real estate experts.
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