Housing is expensive; one in six Swiss people spends more than a third of their income on it
Keystone-SDA
A significant proportion of the Swiss population finds it difficult to spend less than a third of gross household income on accommodation.
According to a representative survey commissioned by the online comparison service Comparis, 16% of those surveyed (i.e. one in six) spend more than this threshold on their home.
The situation is particularly difficult for tenants: 22% exceed the limit, compared with 7% of homeowners. Unsurprisingly, the low-income households struggle the most. Amongst those with a gross monthly income of up to CHF4,000, 36% spend more than a third of their income on housing.
“The so-called ‘one-third rule’ is not a law of nature, but it is an important warning indicator,” comments Harry Büsser, a property expert at Comparis, quoted in a press release. Those who consistently exceed this threshold risk having to cut back on other essential expenses, including healthcare and pensions, or finding themselves in difficulty when faced with unexpected outgoings.
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The problem also affects homeowners, despite the checks carried out by banks before granting a mortgage. Financial institutions assess the affordability of the mortgage by generally applying a theoretical interest rate of 5%, which is higher than current market rates. However, the assessment carried out at the time of purchase does not guarantee that the burden will remain sustainable in subsequent years. A loss of income, a divorce, a reduction in working hours or retirement can significantly alter a household’s finances. This is why, according to Comparis, it is important to consider not only the ability to meet housing costs under current conditions, but also the ability to cope with financial changes and unforeseen events.
“When it comes to monthly housing costs, owning a property often seems more affordable than renting: however, people often forget that a considerable portion of their equity is tied up in the house or flat,” emphasises Büsser. “This money cannot be invested to generate a return. Furthermore, there are maintenance costs, renovations and major repairs to factor in. Home ownership may be attractive in the long term, but it is not automatically more cost-effective,” concludes the specialist.
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Translated from Italian, reviewed by an English Department journalist.
