How much value does an old house lose?

The mathematical reality: Lifespan and depreciation

To quantify the depreciation of an old house , professionals use so-called lifespan tables. It is assumed that a solidly built residential building has a theoretical total lifespan of approximately 80 to 100 years – provided it is properly maintained.

In purely linear terms, this would mean that a house loses approximately 1% to 1.25% of its value per year. Here's a calculation example :

• New construction value (excluding land) in 1980: 500,000 CHF.
• Age today : 45 years.
• Linear Depreciation old house : 45%.
• Residual value of the building: CHF 275,000.

But this calculation is too simplistic. In reality, the depreciation of an old house is not linear. In the first few years, the depreciation is minimal. After about 20 to 30 years, when the first major investments become necessary (heating, windows, facade), the depreciation accelerates dramatically. A house where this maintenance has been neglected suffers a disproportionately high depreciation .

Renovation backlog: The turbocharger for the depreciation of old houses

The biggest driver of the depreciation of old houses is the so-called backlog of necessary renovations. Many owners They underestimate the life cycles of components .

• An oil heating system lasts approximately 15–20 years.
• A flat roof lasts approximately 25–30 years.
• lines They last approximately 40–50 years.

If these building components reach the end of their lifespan, this is fully deducted from the purchase price. The depreciation of the old house then corresponds to the accumulated renovation costs. A 60-year-old house that has never been maintained often has a technically zero building value. In such cases, real estate agents refer to it as a "demolition property." The depreciation of the old house is total here; the purchase price is then defined solely by the land value minus the demolition costs.

Energy degradation: A new factor

In recent years, a new factor has emerged that dramatically impacts the depreciation of older houses : energy efficiency. Previously, an old oil heating system was a minor detail. Today, with rising energy prices and strict CO2 regulations ( MuKEn ), poor energy efficiency is a major factor in lowering property values. The depreciation of older houses increases dramatically when buyers know they are legally obligated to replace the heating system and insulate the facade. Banks are more cautious in financing such properties. The depreciation of older houses with energy efficiency classes G or H is significantly higher than that of comparable houses with classes C or D.

Land value as a lifeline?

Why do old houses still sell for high prices? Location is key. While the depreciation of an old house erodes its value, rising land prices often offset this loss. In desirable locations (e.g., Lake Zurich, Geneva), the land is so valuable that the depreciation of the old house is barely noticeable in the overall price. In economically disadvantaged rural regions, however, the depreciation of an old house has a significant impact. Where building land is cheap, an old house is often virtually unsellable if the renovation costs are too high. In such cases, the depreciation of an old house can result in the property being worth less than the total cost of the building.

Is it possible to stop the depreciation of an old house?

The good news: Depreciation of an older house isn't inevitable, but rather a management issue. Regular maintenance can slow down this depreciation. Preserving the value of your property (new roof, modern windows) resets the "lifespan clock." Experts recommend allocating approximately 1% of the building's value annually for reserves. Doing so minimizes depreciation . A well-maintained property depreciates significantly less than one with deferred maintenance. In fact, targeted modernization can even reverse depreciation by raising the standard beyond the original construction year.

How do I determine the specific loss in value of an old house?

To accurately quantify the depreciation of an older house , simply consulting a table of construction years isn't enough. A hedonic valuation or a professional appraisal is necessary. These methods compare your property with thousands of other transactions. They ruthlessly reveal how the market assesses the depreciation of an older house based on its specific construction year and condition. Owners are often shocked by the high depreciation estimates made by experts, often due to their emotional attachment to their homes. However, the market doesn't take sentimentality into account when it comes to the depreciation of older houses .

The role of banks in the depreciation of old houses

depreciation of an older house is also crucial for financing . Banks deduct an age-related depreciation from the replacement value to determine the current market value. If the bank estimates the depreciation of the older house to be higher than your asking price, a financing gap arises. Buyers then need to contribute more equity. A high depreciation of an older house thus limits the pool of potential buyers. It is therefore advisable to have the depreciation of the older house realistically assessed before selling, in order to avoid entering the market with unrealistic price expectations.

Conclusion

The depreciation of an older house is an unavoidable fact of life that affects every homeowner. Theoretically, it amounts to about 1% per year, but this can increase dramatically due to lack of maintenance or new energy efficiency requirements. While rising land prices mask the depreciation of older houses in prime locations , it becomes the decisive price factor in rural areas.

Those who ignore the depreciation of their old house and postpone necessary renovations will pay the price when they sell. Conversely, investing stops the depreciation of an old house . Realism is key. Accept that older buildings are worth less than new ones, and factor in the depreciation of an old house fairly.

If you want to know exactly the condition of your property and how high the technical depreciation actually is, Loft offers you in-depth analyses for greater clarity.

Glossary

• Depreciation due to age: The calculated deduction from the replacement value of a building due to its age and technical wear and tear. It is synonymous with loss of value. old house .
• Service life table: An overview that specifies how many years a component (e.g., window, roof) lasts on average before it needs to be replaced.
• Maintenance backlog: The sum of neglected maintenance work. A high Renovation backlog maximizes the loss in value old house .
• Remaining useful life: The period of time that a building or component can still be used before it is technically worthless or needs to be replaced.
• Land value : The value of the undeveloped plot of land. It is not subject to any technical depreciation (e.g., an old house) and often increases in the long term in Switzerland.