"Basel has done a lot to ensure that it's an attractive place to live"
It is becoming increasingly difficult to find residential property in the city of Basel and the surrounding metropolitan area. In the interview, Philipp Zeugin, Head of Mortgage Center Northern Switzerland, explains where and how it is still possible to buy a house or apartment in the Basel region.
What is the market situation for real estate in the city of Basel?
Philipp Zeugin*: Construction activity in the city of Basel is largely limited to rental apartments. This is because demand – and hence also prices – are so high at the moment that only investors can afford to buy real estate. There is practically no free building land in Basel. Single family dwellings are often acquired by investors, demolished and replaced by smaller multi-family dwellings.
What is the vacancy rate for real estate in the city of Basel?
The vacancy rate for residential property is almost zero. There are still a few condominiums. However, the traditional single family dwelling has practically disappeared from the market. Even with rental apartments, vacancy rates are well below the Swiss average.
Is demand for real estate in the canton of Baselland similarly high?
In the lower Basel region, in the area around Basel, there is lively interest in real estate. Building land is still available in this area, but it's becoming scarcer. The further you move away from the city, the greater the reserves of building land.
You mentioned the prices for real estate in Basel. What trends are you seeing?
In Basel-Stadt, prices for residential property have doubled since 2000. Basel has done a lot to ensure that it's an attractive place to live. Art and public transportation are just two examples. Basel is one of the most attractive Swiss cities. We have also seen a steady rise in prices in the lower Basel region. The area around Basel is becoming more and more attractive due to the lack of space and high real estate prices in the city.
Nowadays buyers frequently require help from their family when buying a home.
Philipp Zeugin, Head of Mortgage Center Northern Switzerland
Which municipalities have the highest levels of demand for residential property?
Of the municipalities closest to the city the most popular are Muttenz, Münchenstein, Binningen, Bottmingen, Oberwil, Therwil, Arlesheim, Dornach, Aesch, Reinach and Riehen. Rheinfelden and Magden stand out in the Fricktal area. These locations between Basel and Zurich are ideal, for example, for couples where one works in Basel and the other in Zurich.
Can the middle class still afford to buy a house or apartment in the Basel region?
It's difficult in the city, but it is possible under some circumstances in the wider metropolitan area. Buyers today are increasingly dependent on help from family sources – for example, if building land can be transferred within the family, or if an advance on inheritance or a gift is made available. If that's not possible, compromises will often have to be made in terms of both the location and the property.
What are the options here?
Buyers may want to consider a two-family house or a terraced house instead of a detached single family dwelling. Or they may have to make concessions as regards the distance to work. I live in Baselland, but I only have a 25-minute commute to work. But even with these compromises, financing remains difficult. Today, both partners are often in work. Their joint income is enough to make a mortgage affordable. However, couples often don't have the necessary equity for a down payment.
Nevertheless, many people continue to dream of buying their own home.
There's even a certain amount of social pressure. It's important to not rush into a purchase; instead prospective buyers should seek advice and clarify their financial situation. A targeted savings strategy, using a Pillar 3a product for instance could enable additional capital to be accumulated. This increases the scope for financing.
You're a home owner yourself. How did you manage to fulfill the dream of owning your own home?
I had the good fortune to be able to move into my grandparents' house. Initially I rented it, because I didn't have enough capital to buy it. Of course, I completely understand how fortunate I was to have this option.
How can prospective buyers who have not had your good fortune find real estate in the dried-up market around Basel?
Nowadays offers are usually only posted online on Switzerland-wide real estate platforms. Anyone looking for a house or apartment should definitely let their friends and family know. Social media can also be used to look for an apartment. Sellers with an emotional attachment to a property will sometimes sell it to someone who will look after it, rather than simply going for the highest bidder. Brokers from the region can help potential buyers along the road to owning their own property. They often have excellent networks.
What support does Credit Suisse offer if someone is looking for a property in the Basel region?
In our Basel branch we have a real estate corner offering a regional service. It has a display showing houses and apartments for sale. In addition, the client advisors may be able to open a door if they are aware that someone wants to buy or sell a property.
We are seeing a shift away from the traditional family home toward apartments.
Philipp Zeugin, Head of Mortgage Center Northern Switzerland
If you can't find a house near the city, you might want to consider the wider Basel area. Under what circumstances are prospective buyers willing to buy a house in the countryside?
The purchase price is one thing. Closeness to nature is also appreciated. Families would like to see their children grow up in a village. Good infrastructure is important, including schools, possibilities for hobbies, and train and bus connections until late in the evening. The communities must keep pace, not only in terms of population growth, but also in terms of infrastructure.
In the city of Basel, the trend is moving away from single-family homes and toward condominiums. What are the trends in the greater Basel area regarding the type of real estate?
What we are seeing is a shift away from the traditional family home toward apartments. Social structure is another factor. The baby boomer generation are moving into apartments for age reasons. They want to stay in the countryside, but they don't want to have to take care of a garden any more. Many of the younger generation would love to live in a single family dwelling but they find themselves priced out anywhere near the city. The increase in single-person households is another important factor. Demand for 2½- and 3-room apartments is rising – including condominiums.
How do you assess the longer-term trends for real estate in the Basel region?
As long as mortgage interest rates remain low, prices for residential property will continue to rise. The real estate market in the Basel region is not overheated. But we have a higher price segment that not everyone can afford. The rising price trend has eased off somewhat thanks to regulatory intervention. The shorter payback period for the second mortgage, among other factors, makes financing more difficult for first-time buyers. Despite this dampener, however, the trend continues.