Press release: “The reference rate is expected to fall in 2025 – and…

19.12.2024 – 00:30

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Press release

Comparis Lomo price index

“The benchmark rate is expected to fall in 2025 – and yet rents continue to rise”

In November 2024, the prices of goods and services covered by the Lomo index increased by 1.7% compared to the same month of the previous year. To them alone, rent amounts have increased by 0.5%* over the last three months. Over the last five years, the increase has even reached 9%. “Following the sharp decline in mortgage rates, the benchmark mortgage rate is expected to fall soon next year. The tenants concerned will then be able to benefit from a reduction in rent. Conversely, new tenants face a continued rise in rents due to the housing shortage. The rise in rents is an important driver of inflation, and it will also remain so in the future,” says Dirk Renkert, Argent Comparis expert.

Zurich, December 19, 2024 – The Lomo price index from Comparis, published quarterly since March 2024 in collaboration with the Center for Economic Research (KOF) of the ETH Zurich, indicates the development of inflation in the housing and construction sectors. mobility (Lomo).

According to this index, housing and mobility prices in Switzerland increased by 1.7% in November 2024 compared to the same month of the previous year. For comparison, the Swiss consumer price index (CPI) established by the Federal Statistical Office (FSO), which covers a basket of more than 1000 goods and services, increased by only 0, 7%*. Compared to August 2024, the prices of the Comparis Lomo index increased, by precisely 0.1% (CPI: -0.6%*). Rent amounts alone have increased by 0.5%* over the last three months. Compared to the same month of the previous year, the increase is even 3.4%*.

An additional cost of 755 francs for a family

“Housing and mobility represent around 40% of the daily consumption budget of an average family in Switzerland. This is why price increases in these areas are particularly painful for consumers,” says Dirk Renkert, Argent Comparis expert. As for the housing sector, the Womo price index records changes in the prices of rent and energy, as well as household goods such as furniture. For the area of ​​mobility, for example, the prices of gasoline or diesel, car travel or even public transport tickets are considered.

Concretely, for a family having spent last year 2500 francs on rent, 1000 francs on car and 200 francs on public transport every month, an increase of 1.7% in the Lomo price index represents an increase costs of nearly 63 francs per month this year. Over the year, the additional cost amounts to 755 francs just for housing and mobility.

The benchmark mortgage rate could fall again in 2025

Rents have increased by 9.3%* over the last five years. If we compare over a period of two years, the increase is 5.9%. Increases in existing rents are taken into account on the basis of the increase in the reference mortgage rate, the latter being calculated from the average interest rate on mortgages held by the country’s banks. Due to the sharp rise in mortgage rates, it rose from 1.25% to 1.75% in 2023. This development, which took place in two stages, resulted in rent increases on the part landlords and lessors.

Since the start of 2024, mortgage loan conditions have become significantly more favorable, with inflation having fallen sharply and the Swiss National Bank (SNB) having continuously lowered its key rate since March. The sharp drop in mortgage rates should soon be accompanied by a decline in the benchmark mortgage rate.

The tenants concerned will then be able to benefit from a reduction in rent. A reduction of 0.25 percentage points in the mortgage reference interest rate results in a rent reduction of 2.9%. However, landlords can pass on 40% of the cumulative increase, as well as a lump sum amount. of 0.5% per year, as part of the general increase in costs.

“The expected drop in the reference rate should result in temporary relief for existing rents. Conversely, new tenants face a continued rise in rents due to the housing shortage. Rising rents are an important driver of inflation, and will continue to be so in the future,” says Renkert.

Biggest price increase in last three months

Since August 2024, the prices of floor coverings and carpets, up 5.5%*, saw the largest increase in November 2024. Bicycles and electric bikes (+5.3%*) and products for home repair (+5.2%*) also increased in price. The prices of living room and office furniture (+2.4%*) as well as motorized tools for the home and garden (+1.6%*) have also increased.

Biggest price drop in last three months

In comparison over three months, the price of fuel has fallen the most. Prices fell by 5.8%* last month compared to August 2024. In addition, during the same period, other household utensils (-2.5%*) as well as heating energy ( gas, fuel oil, firewood and district heating) saw their prices fall (-1.9%). Prices of new and used cars also fell by 1.1%* and 1.0%* respectively.

Highest inflation for people aged 65 or older living alone

By type of household, those consisting of a person aged 65 or over living alone have experienced the highest increase in housing and mobility costs over the last twelve months. The rate of inflation as they feel it compared to last year amounts to 2.3%. In November 2024, the cost of living for this category increased again, by 0.1% compared to August 2024.

If we stick to the figures, it is couples aged 65 or over without children who feel this increase the least. With an index set at 111.5 points, the inflation felt by people in this category in the areas of housing and mobility amounts to 1.4% over the last twelve months. Over a three-month comparison, inflation fell by 0.2% in November 2024.

The lowest incomes are also the most impacted by inflation

Looking at income brackets, we see that compared to last year, it is for the lowest income category that the cost of living has increased the most. For this category, the Lomo consumer price index increased by 2.3%. Inflation remained unchanged compared to August 2024.

The highest income class was the least affected by the increase in prices. For her, prices have increased by 1.5% since last year. Over the past three months, they have fallen by 0.3%.

Highest inflation in French-speaking Switzerland

A comparison of linguistic regions reveals that French-speaking Switzerland recorded the highest increase in prices compared to last year, namely 1.8%. Compared to August 2024, the price level fell by 0.1%.

The lowest increase in prices compared to the previous year was recorded in German-speaking Switzerland and Romansh-speaking Switzerland, where it amounted to 1.7%. Compared to their level three months earlier, housing and mobility prices were 0.1% lower.

* Comparis Lomo price index

The Swiss Consumer Price Index (CPI) measures price developments based on a representative basket of around 1,050 goods and services. Inflation is characterized by a persistent decline in monetary value or an increase in the average price level. The CPI has 12 main categories, including long-term investments and rents. On the other hand, major expenditure items, such as social insurance premiums or direct taxes, are not taken into account. The CPI therefore does not reflect inflation as it is actually felt by consumers.

The Comparis Lomo price index, established in collaboration with the ETH Zurich’s Center for Economic Research (KOF), reflects inflation in the areas of housing and mobility exclusively. In addition, Comparis explicitly takes into account factors such as household type, income category and language region. In addition, a price comparison smoothed over 20 years is carried out and own calculations are carried out for some product groups.
Important note: numbers marked with

were calculated directly by the Federal Statistical Office (IPC/OFS) or are based on figures from the IPC/OFS.
The data underlying the Comparis Lomo index comes from the Swiss consumer price index (
IPC
) as well as the Household Budget Survey (HBS). The weights for the new price indices are established based on the
EBM
. The
Laspeyres chain indices

with the CPI price series. The base index is that of December 2017 (corresponds to 100%).

Dirk Renkert Expert Argent Téléphone: 044 360 53 91 E-mail:  [email protected]  comparis.ch/hypoPlus

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