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The new real estate report shows where Covid-19 has made its mark. While rents continue to fall in Switzerland, prices for single-family homes have risen again. Solothurn, Olten and Upper Emmental are particularly popular.
The neighborhood of “Les Vignes” in Courgevaux in the canton of Friborg.
Photo: Adrian Moser
A single-family house with five rooms and 101 square meters of living space for 630,000 francs? In Olten SO, where this property is currently for sale, it is probably in more demand than it has been for a long time. Because the search for its own four walls is currently moving to small and medium-sized cities. And wherever demand increases, prices follow suit.
The current real estate monitoring carried out by the consulting firm Wüest Partner shows how Corona has affected and will continue to affect the real estate market.
The demand for residential housing has increased in the summer months of this year. According to Wüest Partner, it was even above the level of the same quarter of the previous year in Switzerland in the second quarter. Single-family homes, in particular, are in higher demand than they have been for a long time. Therefore, the dream of having their own four walls could be very far for many Swiss.
In centers like Zurich or Bern, the prices of single-family homes are already very little affordable. By mid-2020, the Swiss median price for single-family homes had risen 3.3 percent.
Smaller cities are in demand
Now, Wüest Partner’s figures show that new regions are experiencing price increases that were less popular before: Olten, Solothurn or Upper Emmental. In the second quarter of this year, prices for single-family homes in Olten increased 3.8 percent compared to the same quarter a year earlier. In Solothurn it was 4.2 percent.
One of the reasons for this change is the corona pandemic. “The trend towards home offices has accelerated this development,” says Robert Weinert, Director of Real Estate Monitoring at Wüest Partner. In addition, the low interest rate environment widened again as part of the fight against the economic effects of the pandemic. Financing costs for homeownership would remain lower than rents in many places for the foreseeable future.
And at the headquarters, fears of a new blockade and the effects of the virus make regions like Olten, Solothurn or Upper Emmental more attractive. “It’s not far from there by car to the centers of Bern, Basel or Zurich, and the public transport connections are good,” says Weinert. In addition, smaller cities are more attractive for their infrastructure such as schools, supermarkets or the cultural offer than the house in the country in the middle of the country. Which also explains why real estate prices in rural areas barely show price increases.
Finding your own home becomes more difficult
Due to the further increase in demand, finding the right home is likely to become even more challenging. Real estate experts write in their report that there are three search subscriptions for single-family homes.
And those who search are getting more and more engaged: according to Wüest Partner, search subscriptions for single-family houses with a smaller living space with around five bedrooms have increased. Because smaller properties tend to be cheaper too.
And prices are likely to keep rising. Because many high-income people are less affected by the corona pandemic and only had to accept minor wage losses.
In addition, the supply of single-family homes, especially in an affordable price range, is scarce. In the vicinity of high-priced centers, for example, the proportion of properties that cost less than 1 million Swiss francs is very limited. And supply is likely to remain tight.
Even if construction activity is noticeably weakening, multi-family homes are still being built. “Building land has to be used efficiently, and we can see that new construction activity for single-family homes is small,” says expert Weinert. Demand is increasing, but supply is barely changing and prices for single-family homes continue to rise.
A side effect of increased demand for home ownership: “In regions like Solothurn, which have many vacant rental apartments, the situation will get worse,” says Weinert. “The vacancy will continue to increase.”
