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Raiffeisen Switzerland's study reveals that replacement construction yields an average of four new apartments for each one demolished, highlighting its necessity in addressing the housing shortage despite criticism. Chief economist Fredy Hasenmaile emphasizes the need for social and ecological compatibility to ensure acceptance of such projects. The rental market remains under pressure from excess demand, while falling interest rates may stimulate construction and increase demand for owner-occupied homes and office spaces.
Switzerland's housing market is under severe pressure, with a significant decline in new apartment construction and a rising gap between market and existing rents. This has led to a lock-in effect, where households remain in unsuitable long-term rentals, exacerbating the housing shortage. Home exchange platforms are emerging as a niche solution, but their impact remains limited compared to the overall relocation needs in cities like Zurich.
The Swiss rental housing market faces significant pressure due to low construction activity and rising demand from ongoing immigration. While low interest rates offer hope for increased residential construction, the current housing stock is insufficient to meet needs, with a notable rise in home ownership attractiveness as prices for condominiums and single-family homes increase.
Switzerland, as a high-wage country, must prioritize automation to enhance efficiency and reduce costs. Fredy Hasenmaile, Chief Economist at Raiffeisen Switzerland, emphasizes that artificial intelligence provides powerful tools to achieve significant savings in this endeavor.
Jerome Powell's recent reintroduction of the term "transitory" regarding inflation raises concerns, as US core inflation remains above the target despite previous aggressive monetary tightening. With rising consumer inflation expectations and potential supply chain disruptions from tariffs, the Fed risks underestimating inflation's persistence. Historical lessons suggest that early intervention is crucial to maintain price stability and avoid a self-fulfilling inflationary cycle.
The Swiss National Bank (SNB) is poised to decide on a potential benchmark interest rate cut next Thursday, with a majority of economists predicting a reduction to 0.25% from 0.50%. While low inflation and modest economic growth support this move, some experts caution that geopolitical uncertainties and unpredictable U.S. policies complicate the outlook. The SNB may also consider foreign exchange interventions as negative interest rates are no longer anticipated.
The Swiss National Bank (SNB) is poised to decide on a potential benchmark interest rate cut, with a majority of economists predicting a reduction to 0.25% from 0.50%. While low inflation and modest economic growth support this move, some experts caution that geopolitical uncertainties and unpredictable U.S. policies complicate the outlook. The SNB may also consider foreign exchange interventions as negative interest rates are no longer anticipated.
Switzerland is set to vote on a reform abolishing the imputed rental value, a tax on notional rental income for homeowners. While homeowners, especially first-time buyers and retirees, may benefit from tax savings, property owners needing renovations and the construction industry could face losses. The federal government anticipates significant revenue declines, but cantons may introduce property taxes on vacation homes to offset this.
Raiffeisen banks in St.Gallen reported a decline in earnings for 2024 due to lower interest rates, despite creating over 50 new jobs and a flourishing stock market business. While net interest income fell, the banks' diversification into investment services led to a slight increase in net profit to CHF 50 million. The overall economic environment remains stable, with rising demand for residential property and job security supporting consumption, despite challenges in the industrial sector.
The planned abolition of the taxation of imputed rental value for owner-occupied properties in Switzerland could lead to significant tax savings for homeowners, enhancing the financial appeal of home ownership. However, the construction industry may face long-term challenges due to reduced investment in renovations, as tax maintenance deductions are eliminated. The reform is expected to result in billions in lost tax revenue for authorities if current interest rates remain low.
Fredy Hasenmaile
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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