Swiss Review 6/2019

Swiss Review / November 2019 / No.6 22 Politics STÉPHANE HERZOG Under 40% of the Swiss population are homeowners, compared to over 50% of French and more than 70% of Italians. This situation is changing slowly, having risen from just 34.6% in 1980 to 38% in 2017. At the same time, interest rates are lower than ever. The fact remains that access to housing is difficult. Rents are high in the cities and property prices are con- sidered a deterrent. In the Lake Ge- neva region, it is not unusual to spend 2,500 Swiss francs or more per month on a family apartment. It’s also hard tomove house, given the low levels of availability: just 0.89% in Zurich and 0.54% in Geneva, for example. In the latter city, freehold ownership prices for properties built in the 1980s are set at over one million francs, with any property available at a state-reg- ulated price snatched up immedi- ately. This is the reason behind the fed- eral popular initiative “Davantage de logements abordables” (more afforda- ble housing), due to be put to a vote in 2020. The text drafted by the Swiss Tenants’ Association invites the Con- federation to promote “the acquisition of apartments and family homes for personal use”. However, the central idea behind the project, which is op- posed by the right, is to promote the construction of social housing (see be- low). Meanwhile, in March, the Coun- cil of States decided to inject 250 mil- lion francs into the fund for social housing. Philippe Thalmann, Professor of Eco- nomics at EPFL inLausanne, is a real es- tate expert. He answers some ques- tions for “Swiss Review”: “Swiss Review”: they say the Swiss dream of home ownership, but few actually achieve it. Is that still the case? Philippe Thalmann: Four Swiss out of five dreamof owning their own home, but this aspiration is still not as strong as in other countries. In fact, our survey showed that few people had approached their banks for a mortgage. Why is that? We have noted that tenants who dream of home ownership imagine it will improve their level of housing. They envisage a much bigger apart- ment or a detached house. If it were possible to suggest they buy their own apartment for a reasonable price, it might be different. The dream of a high-end property for 1million francs or more is unattainable. And on the other hand, there isn’t much of an al- ternative in the form of accessible housing at themoremodest end of the market. What about access to housing in the cities? The availability of new and reasona- bly priced freehold apartments is low, as it is for older constructions. Re- garding rental prices, it costs 20% of income on average, which is accept- able. Aspiring buyers usually have to leave the city and live somewhere on the periphery. So, the price to be paid becomes the fact of living in a more remote location. With interest rates at record lows, shouldn’t the property market be more accessible? If you compare rent with a low mort- gage, buying, even for a high price, does make sense. However, without an inheritance it is difficult to meet the eligibility conditions for a mort- gage. You have to pay a 20% deposit and not commit to interest payments that exceed 30 % of your income. Moreover, the banks calculate this sumon the basis of an interest rate of 5%, as opposed to the current rate of 0.9 %. At the same time, the more rates fall, the more agents can hike up the prices. As for the landlords, they haven’t changed rents much to reflect lower interest rates. Is the incentive to buy or sell apartments not enough in itself? Real estate provides a return for pen- sion funds or individuals. These ac- tors rent out their properties rather than selling them. That is why two- thirds of people in Switzerland are tenants. In France, developers build to sell. Moreover, rental property in Switzerland is well maintained and 80% of tenants consider their rent The Swiss dream of villas, but rent apartments Property ownership is decidedly low in Switzerland. There are material obstacles to purchasing property and the Swiss do not necessarily prioritise home ownership as an investment. A popular initiative is calling on the state to facilitate access to housing.