Real estate market continues to show no signs of correction
Published: Tuesday, Nov 19th 2024, 11:30
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The Swiss real estate market continues to show no signs of correction. In recent months, prices have continued to rise in this country, while neighboring countries such as Germany and France have suffered considerable losses.
In the last twelve months, Swiss home prices have risen by 3.8 percent, as calculated by real estate consultancy IAZI in a study published on Tuesday. In the past six months, the upward price trend has at least slowed somewhat to 2 percent.
According to the study, prices for private residential property in Switzerland have risen by as much as 8.9 percent over the last two years. This makes Switzerland stand out. Meanwhile, neighboring countries such as Germany (-12.2 percent) and France (-4.5 percent) have had to accept some significant price corrections over the last 24 months. In Europe, only the UK (+3.1%) and Italy (+2.8%) recorded positive figures.
In this country, the ongoing interest rate cuts in particular have made financing cheaper again since last year and thus ensured a further increase. According to the IAZI, the interest rates for ten-year fixed-rate mortgages and Saron mortgages are currently almost identical.
No price correction in sight
The market for investment properties has been an unstoppable success story for 25 years, the communiqué continues. "The frequently invoked bursting of a price bubble has not materialized, although there have been minor downturns in the price curve."
In addition, many factors point to a further rise in yield-producing real estate. The Swiss National Bank (SNB) is likely to cut interest rates further. In addition, immigration is likely to continue to ensure strong demand for residential property, which will lead to rising rents. However, this does not include existing rents, which only move up or down in line with the reference interest rate.
Sharp price increase in the mountains
However, the often-cited housing shortage not only affects the large conurbations, but also the mountain regions. It is said that apartments have become very scarce there because the boom in vacation apartments is continuing.
According to the data, a typical model apartment with 115 square meters and in good condition is most expensive in Geneva with a price of CHF 2.22 million, followed by Zurich with CHF 2.12 million. Third and fourth place are taken by two mountain villages, St. Moritz (1.74 million) and Zermatt (1.70 million). They are followed by Lausanne (1.65 million).
But other vacation resorts such as Val de Bagnes (1.60 million), Saanen (1.52 million), Andermatt (1.38 million) and Davos (1.37 million) also beat the major cities of Basel (1.36 million) and Bern (1.26 million).
Vacation apartments in high demand
Vacation homes continue to dominate in the mountain regions, with the proportion of second homes in individual mountain communities far exceeding the legally prescribed 20 percent, as IAZI notes. In Arosa, for example, the proportion is 75 percent, in Scuol 61 percent, in Obergoms 79 percent and in Grindelwald 63 percent.
Prices for vacation apartments climbed by 14 percent last year, according to IAZI: "The snowless winters will continue to boost the attractiveness of vacation apartments, especially in destinations located at an altitude of 1,000 meters above sea level," IAZI believes.
The situation will become particularly problematic for locals and seasonal workers if the gap between the development of available rents and wages continues to widen. "Seasonal workers also have to accept longer commutes if they can no longer find affordable accommodation near their workplace."
According to the IAZI, there is currently no sign of any easing in the mountain regions. "Low vacancy rates in tourist regions point to the Alpine housing shortage." Only in Ticino is the vacancy rate currently above 3 percent.
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