Living in Switzerland: one in 6 spends more than a third of their income

Context

TL;DR

• 16% exceeds one third of gross household income
• 22% of tenants exceed the housing threshold
• 7% of homeowners exceed the same limit
• 36% of households with up to 4000 francs exceed the threshold

Key facts

• Threshold → one third of gross household income
• Survey → representative, commissioned by Comparis
• Tenants above the threshold → 22%
• Homeowners above the threshold → 7%
• Monthly gross income up to 4000 francs → 36% above the threshold
• Theoretical rate applied by banks → 5%
• Source abbreviation → ATS (Keystone-ATS)

16% of respondents allocate more than one third of their gross household income to housing. This is the central finding of the representative survey commissioned by the online comparison service Comparis. The news item, introduced by the ATS abbreviation in the form Keystone-ATS, translates the percentage into an immediate formula: one in six Swiss people exceeds the threshold considered a benchmark for housing expenses.

The comparison between tenants and homeowners

The pressure is not distributed equally. Among tenants, 22% allocate more than one third of their income to housing. Among homeowners, the share falls to 7%. The comparison shows a difference of 15 percentage points between the two groups, calculated by subtracting 7% from 22%; it does not, however, indicate the average amount paid by each household.

The source points to difficulties especially among households with low incomes. Among those whose monthly gross income does not exceed 4000 francs, 36% allocate more than one third of their income to housing. This figure concerns the group of households identified in the survey and is not extended by the source to all income brackets.

«The so-called one-third rule is not a law of nature, but it is an important warning benchmark,» comments Harry Büsser, real estate expert at Comparis, quoted in a press release.

According to Büsser, consistently exceeding the threshold can erode the resources needed for healthcare and retirement provision and leave little room to deal with unexpected expenses. The survey, therefore, measures not only the share allocated to rent or homeownership, but also what remains in the household budget after housing costs have been paid.

Operational details

The reference to 5% concerns buying a home through a mortgage. Before granting financing, financial institutions generally assess affordability based on a theoretical interest rate of 5%, higher than current market levels. This is not the rate actually paid by the homeowner, but rather the theoretical parameter used in the bank's assessment.

Affordability goes beyond the day of purchase

The bank's assessment concerns the moment when the mortgage is granted. The source warns, however, that this assessment does not guarantee that the burden will remain affordable in the following years. After the purchase, the household budget may change if an income is lost, in the event of separation, a reduction in the employment rate or retirement. Comparis therefore indicates that, in addition to the ability to bear housing costs under current conditions, the ability to cope with financial changes and unforeseen events is also relevant.

This clarifies the relationship between the 5% and the one-third rule. The former is a theoretical criterion applied by financial institutions to the affordability of the financing; the latter is defined by Büsser as an alert value for the burden of housing on gross household income. They are different quantities, and the text does not add them together, convert them into a monthly installment or indicate by how much each household exceeds the threshold.

Other budget items

The reference to healthcare and pension costs connects the housing figure to the cost of living, but the survey does not separate these items into instruments such as LAMal/KVG, AVS/AHV or LPP/BVG. These terms help to interpret the categories mentioned in the source; however, they are not additional percentages or amounts from the survey. Comparis only points out the risk that, in the face of a consistently high housing burden, a family may have to cut back on other essential expenses.

Key points

The survey does not only describe the difficulties faced by those who pay rent. The source also cautions against an immediate comparison between the monthly cost of ownership and that of renting: at first glance, owning may seem more affordable, but a considerable portion of equity remains tied up in the house or apartment. That money cannot be invested to generate a return. Maintenance, renovations and major repairs are also added to the monthly cost.

The comparison missing from the monthly payment alone

The interpretation proposed by Comparis can be summarized as follows:

The table does not alter the 7% figure among homeowners and does not make it possible to determine which choice is best for every family. It adds a limitation to a comparison based solely on the monthly payment or housing expenditure: the source also considers the capital tied up and the outlays that arise over time.

The text does not provide a breakdown of the percentages by canton or city. Nor does it attribute the figures to UST/BFS or SECO: it presents them as the result of a representative survey commissioned by Comparis, with the news reported by Keystone-ATS. Therefore, the 16%, 22%, 7% and 36% describe the shares indicated for the groups mentioned, but do not make it possible to reconstruct territorial differences, average amounts or changes over time.

The specialist's conclusion remains cautious: owning may prove attractive in the long term, but it is not necessarily more affordable. To read this topic alongside the other expenses incurred by households, consult cost of living in Switzerland

Source: swissinfo.ch