Holiday properties are unique compared to other properties, with differences in taxes, financing with mortgages, and renting options. Despite the impact of the Corona pandemic, there continues to be a strong demand for holiday homes in Switzerland. Prices have risen, on average, by almost 4 percent in the first quarter of this year, with a total increase of nearly 30 percent since the end of 2019 for holiday homes in the Swiss Alps. According to UBS, prices on the entire real estate market have increased by around 20 percent.
The market for Swiss holiday properties has become more exclusive, with many homes now only offered through real estate agents rather than advertised publicly. While these properties have seen significant appreciation, the question remains as to whether they are a good investment.Rental income can provide a return of around 4 percent on average for Swiss holiday homes, with some destinations like the Jungfrau region or Zermatt offering returns of 6 to 7 percent. However, maximizing rental income often requires not using the property during peak demand periods such as the holidays.
Financial experts advise that the decision to invest in a holiday property should not be purely financial but also consider personal enjoyment and passion for the property. It is important to factor in the costs associated with owning and maintaining a holiday property, such as insurance, energy costs, maintenance, and municipal taxes. High investment requirements may be needed for older properties in need of renovation, and financing holiday properties can be more challenging than traditional homes.
Income from renting out holiday properties is subject to taxation, and mortgage lenders typically only provide loans for up to 50 or 60 percent of the purchase price. The overall price development of holiday properties may be subdued in the current economic climate. It is essential for potential buyers to inform themselves about legal regulations, permit requirements, and potential restrictions on renting out holiday properties.
Some holiday apartments are integrated into hotel complexes and rented out through the hotel, offering a potential option for owners. However, there are risks and considerations involved in this type of arrangement, including the financial stability of the hotel and potential limitations. Overall, owning a holiday property requires careful consideration of financial, legal, and personal factors to make an informed decision.