Demographic development and the possible effects on real estate

Demographic development is a decisive factor for the real estate market in Switzerland. Population size, age structure and immigration/exmigration influence the demand for housing and have a direct impact on property prices and their availability. But what is the outlook for the future?

In recent weeks, one has read from time to time of slight price corrections for single-family houses due to falling demand. One reason is certainly the higher mortgage costs, as was the case in previous years. Often people want to wait and secretly hope that the prices will actually fall and that they will then be able to buy. In the following article, however, we look a little further into the future and look at various forecasts.

ü80 Growth in BL +77%

In the canton of Basel-Landschaft, according to the BL Office for Data and Statistics, the following population forecasts are assumed:

It is expected that in the near future there will be significantly more people over the age of 65 in the region as well as in Switzerland as a whole. It is no secret that thanks to medical progress and technology we are enjoying longer lives. At the same time, however, the number of working people in Switzerland is shrinking. (https://www.viz.bfs.admin.ch/assets/01/ga-01.03.01/de/index.html). In the canton of BL we have had more deaths than births for the last 3 years. The impact of this on pension provision will be discussed in a later article.

Seller transactions predominate from 60 years onwards

When you look at the Transactions by private individuals of buyers and sellers, it is the buyer transactions that predominate up to about age 59. After that, it changes and from the age of 60 onwards, people sell. Can this curve also shift backwards? Quite possibly, because it is very likely that the retirement age will be raised even further in the future and that at the age of 70 one will still be a buyer. healthy or financially in a different situation than today to still afford a home. The question that arises here; Which Art of buying property from the age of 60? On average, people of advanced age need less living space than in the years before, when their children lived in the same house. Therefore, the demand for condominiums may continue, especially in cities and agglomerations.

The danger is rather that many owner-occupied houses will be put up for sale at the same time in the coming years.

Is the demand sufficient to cover the future supply of single-family homes? In the cities and their agglomerations, it will be possible to balance demand with parts of immigration. In the rural areas, however, the number of sellers may already outweigh the demand in the near future and be able to correct prices downwards. According to Demography Conference of the Canton BLAccording to forecasts, the number of sellers in Bubendorf will exceed the number of buyers by about 2034. In the more rural Lampenberg, this could already be the case in 2024. What cannot be taken into account in such forecasts are future projects that could in turn provide growth in the individual areas. A new shopping centre in a good location, leisure facilities, better transport connections or schools. If the electorate had approved the tram extension of the 14 in 2021, this could have offered significant added value not only for the Salina Raurica area, but for Basel as a business location as a whole.

Expected growth

In the past, Switzerland has always had a growing population. Especially around the urban areas, the number of inhabitants has risen sharply in recent decades. The federal government's expectations also tend to be geared towards further growth. The 3 scenarios are as follows:

Low scenario: until 2040   ̴ 9.4 m

Reference scenario: until 2040   ̴ 10 m

High scenario: until 2040   ̴ 10.4 m

So we continue to assume a strongly increasing population. Is it necessary to adjust the reference scenario downwards? The latest figures of the Eurostat report show that the population in Europe has shrunk by half a million compared to 2020. Also China or Japan are currently shrinking faster than expected. Also declining are the numbers of employed persons from the Germany, France, Italy and other European countries, which account for the largest share of immigration and are also potential home buyers. This, in combination with the above-mentioned development of the age structure and the above-mentioned decline in the number of employed persons in Switzerland, may have an impact on price development.

It all comes down to the right planning

Some of the houses that will become available in the coming years will be tried to be passed on within the family. Often, however, this is not as easy as one might imagine. Siblings have to be paid off or all the savings are in the house and served as old-age provision for oneself and the children of the children are already almost grown up. It is also often very difficult for young families with part-time jobs to realise this dream at all.

As is so often the case, it is worth tackling the issue early on with everyone involved and not waiting until the last moment. With early planning, for example, you can avoid having to sell the house to third parties and keep it in the family. With a contract of inheritance during one's lifetime, one can avoid disputes among the heirs or ensure that one can fulfil one's dream of owning one's own home with goal-oriented financial planning.

For the sellers/decedents, forward planning is also helpful due to possible tax traps and also serves in pension planning.

Even if the forecasts, the provocative questions and statements sound a little melancholy, we hope that we will not fall into a severe housing crisis and that politics and the economy will set sail in time. Perhaps they will allow housing projects with affordable flats to be approved more quickly and easily, improve mobility in rural areas or lower the hurdles for young families and promote age-appropriate housing.

As financial planners, it is important for us to inform our clients about such topics and to show that real estate prices do not always go uphill and that there will also be different scenarios depending on the region. It is also advisable to take these forecasts into account in all aspects of home ownership and financial planning and to minimise possible risks. Those who already own their own home should also consider strategic amortisation planning.

How your financial planner can help you

Your financial planner is able to draw your attention to various aspects, including real estate ownership, in the sense of holistic planning. Based on your personal circumstances, they will point out possible risks or opportunities and support you in preparing for them in the best possible way. At finberg.ch you will find more helpful Guidebook for the topics of taxes, pension provision, estate planning, real estate and investing.

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