Home prices up in March, rents down slightly
Published: Thursday, Apr 4th 2024, 08:00
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Following a slight easing in February, prices for owner-occupied homes in Switzerland rose again slightly in March. Meanwhile, the development of asking rents varied greatly from canton to canton. While regions with higher demand continued to increase, rents fell in other parts of the country.
The "Swiss Real Estate Offer Index" published on Thursday by Immoscout24 and real estate consultancy IAZI shows a price increase of 0.4% for condominiums in March compared to the previous month. Compared to March 2023, the price increase is therefore 2.3%.
Single-family homes also became slightly more expensive in March, rising by 0.3 percent. In contrast to condominiums, however, asking prices for this form of housing remained virtually unchanged compared to a year ago. This suggests that providers do not currently expect to be able to push through further price increases, according to the report.
Irrespective of the current price trend, however, buyers of residential property are currently likely to focus on purchasing a condominium rather than a single-family home for two reasons. Firstly, the supply is significantly greater throughout Switzerland and secondly, the purchase prices per property are lower and therefore easier to finance.
Inconsistent developments in asking rents
Tenants of apartments, on the other hand, can breathe a sigh of relief, at least on average. According to the data, the average asking rent in the country fell by 0.2 percent at the official relocation date at the end of March. However, there was also a noticeable increase of 2.8 percent over the course of the year.
There are major regional differences: the figures have increased in Central Switzerland (+1.7%) with the hotspots Zug and Lucerne. Moderate increases can also be seen in the greater Zurich region (+0.7%) and in Eastern Switzerland (+0.2%).
In the major regions of Zurich and Central Switzerland in particular, which recorded increases in asking rents in March, further price rises can even be expected due to the pronounced housing shortage, according to the report. In contrast, there were declines in the Lake Geneva region and Ticino (-1.3% each), in Northwestern Switzerland (-0.7%) and in the Central Plateau (-0.4%).
Lower reference interest rate not yet an issue
Meanwhile, the Swiss National Bank's (SNB) cut in the key interest rate last month is good news for tenants without plans to move. The reduction in the key interest rate to 1.5 percent is likely to encourage the reference rate to remain fixed at its current level, according to real estate specialists.
However, reductions are not yet an issue. This would require mortgage interest rates to remain significantly below the current level for a longer period of time due to the inertia of the rental reference rate.
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