According to data from MoneyPark According to Cockpit, the value of single-family homes has increased by an average of 5.8 percent per year over the past ten years. In 2013, property owners invested an average of around CHF 300,000 in equity to purchase a home worth CHF 1,050,000.
This meant a loan of around 71 percent through a mortgage. Today, the value of these properties is CHF 1,587,000. If sold at the current market value, the equity would rise to CHF 844,000, which corresponds to a tripling of the original invested capital.
The graph shows how the value of homes has increased over the last ten years.
Real estate as a source of capital: an untapped potential
“Own homes have proven to be an extremely lucrative investment in recent years. Many owners are not aware of how much equity they have built up in their property,” explains Lukas Vogt, CEO of MoneyPark. The great potential is particularly evident in owners who bought an apartment ten years ago: the average increase in value of a standard apartment during this period was around 4.2 percent annually.
This has resulted in the original equity invested more than doubling when the property is sold. “Even if investments are required to maintain or improve value, such a doubling highlights the size of the pent-up assets,” adds Vogt.
Sale as an opportunity to capitalize
Selling a beloved home can be a way to realize the tied-up capital. According to the According to the 2024 dream home study by Helvetia and MoneyPark, six percent of property owners plan to sell their property in the next three years and a further 15 percent within four to eight years.
For 17 percent of those interested in selling, realizing the increase in value is a key reason for selling. Compared to investing in the SMI ten years ago, these owners would have only experienced a capital increase of 75 percent and also borne high rental costs.
Get advice
If you have any questions about your mortgage, please do not hesitate to contact us. The experts at MoneyPark We weigh up the advantages and disadvantages of the various options with you and help you make a decision. Because with the right mortgage you can save a lot of money.
Alternative: keep your home and strengthen your retirement provision
In view of the upcoming referendum on the reform of occupational pensions, an existing home can make a significant contribution to retirement provision. Anyone who bought a house ten years ago with 71 percent borrowed capital (mortgage) will now only have a loan-to-value ratio of 48 percent due to the increase in value.
This scenario makes it possible to increase the mortgage to up to 67 percent (1st mortgage) if income is sufficient, thus freeing up an average of around CHF 315,000. For example, if this capital is paid into the pension fund over five years, owners could increase their future pension by almost CHF 17,000 per year or CHF 1,400 per month (based on an average conversion rate of around 5.3% according to Swisscanto’s latest pension fund study).
This would also result in an annual tax saving of around CHF 17,600 (at a marginal tax rate of 28%), which means a net saving of over CHF 13,000 per year despite the slightly higher interest burden on the newly increased mortgage.
The graphic shows how the loan-to-value ratio of real estate has changed over the last ten years.
