When buying a house is not accessible to all

LA DOMENICA

An economic and social paradox: bricks and mortar in Switzerland «pull», while in Ticino the homeownership market stagnates

When buying a house is not accessible to all
When a roof is not for everyone

When buying a house is not accessible to all

When a roof is not for everyone

It is an economic and social paradox: the property market in Switzerland «pulls», with rising property prices, as witnessed by the quarterly reports of some credit institutions and the most recent analysis of Immoscout24, whereas in Ticino the property market, especially for the middle class, stagnates. The reasons? Primarily three, explains Renza De Dea, a real estate entrepreneur: «The excessive burdens and tight financial stakes imposed by law on banks to grant mortgages and by pension funds to «free» the accumulated capital without excessive annuity losses; the shortage, I would say almost the complete absence of developable land, resulting in an increase in the cost per square meter of those available or the failure to sell non-buildable areas while waiting for «the wind to change»; finally, the constant increase in prices per square meter that creates an overvaluation of the objects to be purchased,« emphasizes De Dea. Who then uses a metaphor on the behavior of credit institutions: «When it rains, banks close their umbrella, while when the sun shines they wave it under your eyes». However, it must be pointed out that banks have tightened the rules in order to cool down a market where a «bubble» has been repeatedly hypothesized and after the American experience of «subprime mortgages» that caused the economic crisis.

However, Alberto Montorfani, secretary of SVIT, the Swiss association of real estate economics and in turn a trustee, maintains that all this has «side effects». «I myself - he says - as a representative of the so-called middle class, have been trying to buy an apartment for thirty years without success. Fifty years ago my father paid for the land on which he then built the family home with 4 monthly instalments; nowadays 8 monthly instalments would not be enough to buy the same land, in addition of course to what is involved in applying for a mortgage. The parameters of solvency and sustainability that banks require are almost impossible to sustain for an average family that does not exceed 100,000 francs of disposable income».

A concrete case

Raiffeisen Switzerland economist Michel Fleury (see sidebar interview) talks about a concrete case, the purchase of an apartment worth 600,000 francs. At least 120,000 francs (20%) of equity is needed, with a maximum of 60,000 francs coming from pension funds and the rest of course to be paid in cash. The disposable income (i.e. after tax) required for accessibility to credit is approximately 104,000 francs and is composed of 80% of the value of the mortgage, 5% interest ( a very high rate compared to the current trend) and 1% each for depreciation and provisions. Basically, to have a mortgage of 480 thousand francs spread over twenty years it is necessary to earn at least 140, 150 thousand francs per year. «It is indeed so - confirms Veronika Imber, consultant of ipoteca.ch, a company that deals precisely with real estate sales and sustainability of investments in bricks and mortar -. It often happens that I «check up» on young people or families who turn to us to assess the possibility of buying a property or an apartment. And it happens to us to «disillusion» our stakeholders on the real possibility of buying a house».

Self-regulation

Parameters that are rather strict on the part of banks, but even more insurmountable on the part of insurance companies and pension funds that carry out real estate transactions. «In these cases, since there is no code of conduct and no legal basis subscribed to by the credit institutions and supervised by Finma (the Federal Financial Market Supervisory Authority), the parameters for granting mortgage loans are even stricter,« Imber points out. On the other hand, observing the latest data from the Giubiasco Office of Statistics on real estate transactions in Ticino, one immediately notices that, over the last fifteen years, business with bricks and mortar has been fluctuating. In 2007, for example, there were almost 5,800 transactions, with 308 more deeds than in the previous year, while just one year later, in 2008, sales dropped by 500 units. And after a decade of substantial stability, in 2019 and especially in 2020, the first year of the pandemic, there was a sharp increase (+200) in real estate transactions, with the nominal value of apartments and houses purchased in Ticino since 1950 exceeding 3.8 billion francs. It is precisely the lockdown that has made us realize how important it is to own a spacious apartment or a comfortable house, perhaps with a bit of a garden,« De Dea stresses. «However, those who advance money for a mortgage should be more sensitive to this renewed desire for home ownership and loosen the hinge on their wallets a bit to get the economy moving again.

Financial Alchemy

One way to «get around» the strict banking criteria and still reach the coveted goal of homeownership is to turn to experts. Veronika Imber illustrates two recent cases in which, by reasoning on the basis of her own capital, she managed to obtain a mortgage. «Two young people living together, aged 27, with no pension fund and very little savings, with her working but him still studying, applied for a mortgage for an apartment. Discussing with their bank we arranged for them to receive financing thanks to the advance of an inheritance and the other share for the necessary cash was granted with a loan until the end of their studies.» In another case dealt with recently, a young couple in their thirties with two children who did not think they would reach 20% of their own means and had resigned themselves to not buying a house had the right «tip». «The wife - concludes Imber - had a free third pillar policy that we diverted to the equity portion. For the remaining 10 percent, they used funds from the pension fund».

©CdT.ch - Riproduzione riservata

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