Real Estate in Switzerland, 2023

Just to be sure. When you say Switzerland is also highly indebted. What metric are we looking at ?

That did age well :slight_smile:

High real estate prices and tax incentives to not pay off your mortgage have to show up somewhere :roll_eyes:

For the real estate gurus, I have one basic question. What’s your view with respect to real estate price in future and its relationship with population peak coming?

Historically Real estate value always went up because land is limited and people are increasing. But this wouldn’t be the case when we hit a population peak. am not talking about price in highly lucrative cities like Zürich, Rome etc. But the larger index level changes.

Any thoughts?

The only data point I have is Italian real estate index which is still below its peak in 2010. Italian population also peaked in 2014. But I don’t know if this is just a random fact or there is something behind this

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This is a very important question. Not only for real estate, but also for stocks.

Everybody assumes stocks only go up, but maybe that’s because population only goes up and economic activity only goes up.

I think we might look to rapidly aging populations in Japan and probably soon South Korea and see if that gives us a clue.

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I think it would be foolish to believe the ones in power (and profiting the most from stocks always going up) are not already preparing for that. I think robots and AI will in the short term absorb the missing economic capacity (humans, machines and computers x efficiency = economic output) and replace humans and computers in the long term. This is just my bold prediction as of right now.

For real estate this would mean less buildings with humans inside and more buildings with servers and AI accelerators etc. (datacenters).

Yes, but what are they producing?

Let’s say there are only 10 humans left in the world: How much production do you need for those 10 people even if they have all the wealth in the world to spend?

Reduction in people reduces demand, even if you somehow manage to compensate for supply. Which maybe speaks to a deflationary future.

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Though maybe I underestimate people’s propensity to consume…

What population peak? There will be 4 billion people in Africa by end of this century. More than enough for 1-2 billion to immigrate to the West. Switzerland will soon have 10+ million people.

Well, this assumes the solution to population peak is immigration. That might or might not work.

Can you say more what you mean by peak?

The population is growing quite rapidly due to immigration. I haven’t seen any prediction of that stopping anytime soon

Japan has been declining for a while. I expet South Korea to decline rapidly soon. I’ll have to look into the numbers, but I suspect Western Europe is likely to decline in the not too distant future.

There are of course parts of the world still growing, though it isn’t clear whether this offsets the decline elsewhere (in terms of economic activity).

I read an article last year about global population peaking at 10 billion. But maybe the EU numbers would be more relevant here. See below the link

In data: The EU faces a major demographic decline with 27.3 million fewer people by 2100 | Euronews.

Since the thread is about CH Real Estate I think we need to consider CH population

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Sure. So we are saying that Swiss population is projected to grow over foreseeable future due to immigration?

I couldn’t find any report about this. I am just asking. Only information I remember reading about is that Switzerland should hit the peak within next 20 years.

1% SNB rate by end of year?

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Place your bets!

1234567890

That would be really sweet lol.

the question is whether it is already “priced in” in the current mortgage rates or they can go down to somewhere closer to 1.5%

Just talked to a bank today and I’ve been told that in this case the ratio between the cost (5% interest, 1% ammortization, 1% maintenance) and the rent can at most be 120%.

In your scenario, this would require a rent of 73.67k/year for the calculated costs of 88.4k/year.

This seems super odd to me, maybe its just this one bank operating this way…

Does anyone have some inputs/thoughts regarding this?