Real estate: close to summits |Allnews

Yves Hulmann

4 minutes of reading

Donato Scognamiglio, director of CIFI, observes that the gap between the progress of real estate prices and that of wages continues to widen.

On Wednesday, the Federal Council and the Swiss National Bank (BNS) announced that they wanted to reactivate and raise the anticyclical funding of equity for banks, with the aim of limiting risks deemed up on the mortgage and real estate market.How do we assess the value of a property and what are the parameters to be taken into consideration when you want to buy or sell a house or a property per floor?For more than two decades, the Information and Real Estate Training Center (CIFI or IAZI in German) has developed models that are used to assess the value of real estate.Update on the usefulness of these evaluation methods as well as on the market situation in Switzerland in general with Donato Scognamiglio, director and partner of the CIFI and professor at the University of Bern, during an interview with theOccasion of the Immo'22 show held in mid-January in Zurich.

Pour la majorité des objets, le modèle statistique parvient à expliquer de manière précise la valeur d’un objet.The tool is very precise for standard objects.Depuis les années 1990, le CIFI utilise la méthode d’évaluation dite hédoniste pour estimer la valeur de maisons individuelles, d’appartements et d’immeubles de rendement. Est-il toujours possible d’évaluer le prix d’un objet immobilier à l’aide d’outils statistiques – alors qu’il s’agit d’un domaine où les décisions d’achat sont souvent prises sur la base de facteurs très personnels, voire émotionnels?

The hedonistic real estate assessment models as we use them indicate a price range for a given real estate object.For example, if the model indicates that the price of a house is 1 million francs, this means that there is 68% chance that the amount of the transaction is between 900,000 francs and 1.1 millionfrancs.This model takes into account different parameters such as the quality of a property, its surface, its location, its proximity to public transport or other services.On the other hand, it does not integrate the personal purchasing and sale reasons which can lead to the realization of a transaction.This model does not pretend to be able to integrate all of the subjective and personal factors which can motivate or not the realization of a transaction.For the majority of objects, the statistical model manages to explain precisely the value of an object.The tool is very precise for standard objects.It would of course be possible to complete it by incorporating further additional variables - but for what result?Would it be worth adding all kinds of other variables to be more precise of a few thousand francs?I'm not sure.

Estimer la valeur d’un bien immobilier est une chose, financer son achat en est une autre. A quoi me sert de savoir qu’une maison individuelle vaut 1 million de francs si je ne suis pas sûr de pouvoir emprunter la somme nécessaire auprès d’une banque?

Our evaluation models do not indicate what will be the amount of financing that a bank will be ready to grant for this or that object.Even if two establishments use a similar statistical evaluation model, the bank may agree to finance the purchase of real estate up to 1 million francs, while Bank B will be, it,ready to go up to 1.1 million, for example.All banks must certainly apply common rules concerning financing - for example in terms of equity, calculation of financial capacity, etc..- but it nevertheless happens that their evaluations differ.

The fact that banks in turn evaluate the value of a property is an important control instrument because market prices are checked a second time.The bank has any interest in not surfinating a transaction if it knows that this or that house is not worth as much as a buyer would be ready to pay.Indeed, a bank can be required to take care of the sale of a real estate object itself if the borrower fails to pay his mortgage charges.It is easy in a bull market but it can be delicate when prices change direction.

«Les salaires en Suisse ont beaucoup moins progressé que les prix de vente dans l’immobilier.»Sur Internet, on trouve toujours plus d’outils en ligne qui proposent d’évaluer, le plus souvent gratuitement, la valeur de votre maison ou appartement. Ces outils sont-ils utiles?

I have nothing against such tools-if only because we make such evaluation instruments available ourselves.Potential customers who want to use such tools must however be aware that these instruments do not provide an estimate to the nearest thousand francs but that these platforms have on the contrary any interest in providing very wide price range in order to be able to contact thelarger number of potential customers.Often these platforms make these online assessment tools available above all as a means of collecting "leads" of potential customers.For our part, in CIFI, we do not invest in real estate but we analyze the market and provide statistical tools.

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Les outils d’évaluation du CIFI fonctionnent-ils aussi lorsque des chocs externes surviennent – ou seulement quand les marchés évoluent de manière stable?

The sudden appearance of the pandemic to Wuhan at the beginning of 2020 was the example of such a shock - in this case, a positive shock in the real estate market in Switzerland, because manyhouseholds started looking for accommodation with one more room.In such a case, our evaluation models have simply followed the evolution of the market resulting from this shock.

Fonctionnent-ils aussi en cas de choc négatif? Dans ce type de situations, certains vendeurs cherchent plutôt à cacher le fait qu’ils ont accepté de vendre leur bien à un prix plus bas qu’ils l’ont acheté.

Sooner or later, if prices drop, it will be observed in market statistics.If the market was to fall down, the model will follow this trend.Now it is certain that a trend reversal would be surprising for many people.Two -thirds of people who are on the market are under the age of 50.However, for about 30 years now, prices have been changing, tendencyly, almost always on the rise in Switzerland.

«Côté positif, la conjoncture reste solide en Suisse. L’immigration demeure élevée – même en 2020, ce sont plus de 50'000 personnes qui sont venues s’installer en Suisse.»Comment analysez-vous l’évolution du marché en Suisse depuis l’éclatement de la pandémie il y a deux ans?

My first observation is that wages in Switzerland have progressed much less than selling prices in real estate.In 2021, the prices of the villas increased by almost 7% on average compared to the previous year, the prices of the properties per floor (PPE) also increased by around 5% last year, while salariesthey remained practically unchanged.In the form of a joke, we sometimes hear that to be able to buy a house in Switzerland, the 3G rule is now applied also: namely that you have to have be won ("Gewonnen" in German), stolen ("Gestohlen ") or inherited (" Geerbt ").It is certain that things will not be able to continue to evolve in this way for years.

Assiste-t-on à une situation de surchauffe du marché de l’immobilier en Suisse?

To find out if it is overheating, there are usually two arguments that oppose.On the one hand, some consider that a price paid can never be considered too high because, otherwise, this price would never have been paid.On the other, there are those who, like the BNS, regularly compare the evolution of the prices of transactions with that of rents, wages, etc.., to then provide an appreciation of the situation.Intuitively, my impression is that we are starting to see the summit - and I have never seen a mountain where you should not go down after reaching the summit.

Tant que les taux d’intérêt restent à un niveau historiquement faible en Suisse, pourquoi le marché devrait-il commencer à corriger?

There are always both positive and negative factors that oppose.On the positive side, the economic situation remains solid in Switzerland.Immigration remains high - even in 2020, in full coronavirus pandemic, more than 50,000 people came to settle in Switzerland taking into account the net balance.And then there are important restrictions on the use of the soil.

On the negative side, the evolution of interest rates is of course a great factor of uncertainty.Indeed, even if the BNS maintains its unchanged policy, the refinancing costs on international markets have already started to adjust.In addition, it is also necessary to keep changes of habit induced by the coronavirus-people will leave city centers and agglomerations close to cities to live further and cheaper if they can continue to work two days in home-Office per week?It is still difficult to have an answer to these questions.

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