Despite all headwinds: demand for single-family homes remains robust
The current Online Home Market Analysis shows: On average, a single-family home was advertised on the Swiss real estate portals studied for 66 days, six days longer than in the previous period. At the same time, the number of advertisements also increased by around ten percent. This indicates robust demand throughout Switzerland, despite a simultaneous increase in mortgage rates by almost two percentage points and weaker overall economic performance. A closer look, however, reveals large regional differences.
The volume of advertisements for single-family homes, which declined by 17 per cent in the previous period (Q3 2021 – Q2 2022), recovered in the current period (Q3 2022 – Q2 2023) with eleven per cent growth. At the same time, the average tendering time also increased from 60 to 66 days to the same extent. Despite the strongest increase in mortgage interest rates in the last 30 years, demand for single-family homes proved to be quite robust in the reporting period. This is shown by the current online home market analysis of the real estate portals Homegate and ImmoScout24 in cooperation with the Swiss Homeowners’ Association and the Swiss Real Estate Institute based on the evaluated advertisements of several well-known real estate portals.
For Martin Waeber, Managing Director Real Estate at SMG Swiss Marketplace Group, the results of the current study once again show how robust the single-family home market in Switzerland is overall, despite the significant rise in mortgage rates. “The increased supply and the longer listing period are giving searchers more choice and more time to think, as well as a better overall chance of finding the right property,” says Waeber. However, the best offer is of little use if the question of financing becomes increasingly challenging, Waeber comments on the new analysis.
Listing duration up in many places, demand down
The biggest changes in listing duration were seen in the eight regions of northwestern Switzerland (plus 51 per cent) and central Switzerland (plus 48 per cent). And even in the “hotspots” of Zurich and central Switzerland, sellers with a listing period need more patience than before to sell a single-family home. In French-speaking Switzerland and Ticino, on the other hand, the listing period remained at practically the same level as in the previous period. Nevertheless, in Ticino, with a new average of 136 days, it takes more than three times as long to find a buyer as in the Zurich region with a new average of 42 days.
The combination of the change in the duration of the advertisements and the number of advertisements allows conclusions to be drawn about the development of demand. Although demand in Switzerland as a whole has remained robust, there are considerable differences between the eight regions analysed. The regions of eastern and northwestern Switzerland in particular suffered the greatest slumps in demand. In the region of eastern Switzerland, for example, sellers had to advertise their single-family homes 9 days longer than before (plus 21 per cent). At the same time, almost the same number of single-family homes were advertised as in the previous period (minus 1 per cent).
Rising demand primarily in high-income municipalities
A closer look at the different types of municipalities also shows that demand for owner-occupied homes is rising in six out of eight regions in the high-income municipalities, while it is declining in the majority of suburban municipalities. This majority decline could be related, among other things, to a comparatively higher share of debt financing in these municipalities. Therefore, a rise in interest rates hits these municipalities harder than the high-income municipalities, where, for example, less debt capital is required for the purchase of a home thanks to advance inheritance and thus also less debt-financed funds.
Peter Ilg, head of the Swiss Real Estate Institute, which analysed the data, draws the following conclusion: “Perhaps the risk of a real estate bubble was simply overestimated in the past. While in comparable countries such as Sweden home prices have already corrected noticeably due to the interest rate hikes, in Switzerland there is still no sign of a weakening in the demand for single-family homes. And this despite the fact that the mortgage debt of Swiss households is among the highest in the world, at 140 percent of total economic output in 2020, Ilg concludes.
About the Online Home Market Analysis
The Online Home Market Analysis is a semi-annual analysis that looks at the market for condominiums and single-family homes on an alternating basis. With the eight major regions analysed, it covers the whole of Switzerland and at the same time provides information on the development of supply and demand for owner-occupied homes, differentiated by region and broken down by market segment.
Homegate and ImmoScout24 as well as the Swiss Homeowners Association publish the analysis in collaboration with the Swiss Real Estate Institute of the HWZ Hochschule für Wirtschaft Zürich. The latest edition analyses single-family home listings for the period from 1 July 2022 to 30 June 2023, which originate from several well-known real estate portals and thus comprise the majority of all online listings during the study period in Switzerland.
Here you can find the complete media release on the current Online Home Market Analysis, including further graphics and detailed reports on the individual regions.