Demand for residential property picks up again
Published: Thursday, Aug 15th 2024, 07:50
Back to Live Feed
The Swiss real estate market continues to boom. Following the interest rate cuts by the Swiss National Bank this year, demand for residential property is now also picking up again.
Fears of major distortions on the home ownership market have subsided, Raiffeisen economists wrote in a study published on Thursday. Demand for residential property has largely recovered after the slump following the previous sharp rise in interest rates due to the cuts that have now been made.
"In addition to the return of the housing cost advantage over renting as interest rates fall again, excess demand from the rental housing market is now also spilling over into the owner-occupied market," said Raiffeisen chief economist Fredy Hasenmaile. The increased demand for home ownership is currently still being offset by an increase in supply, which is slowing down price momentum.
However, anyone who is now looking forward to an easing on the price front may once again have rejoiced too soon: According to Raiffeisen, the current increase in supply is not coming from new construction, but only from existing properties, which is why the shortage is only likely to be alleviated in the short term.
The more fluid supply and more confident buyers are already being reflected in a higher number of changes of ownership. The majority of sellers will be able to push through their asking prices. "We therefore expect to see higher price growth again in the medium term," predicts Fredy Hasenmaile according to the press release.
(Too) few new buildings
And despite the renewed fall in interest rates and the halt in construction inflation, there are still hardly any signs of an increase in housing supply in Switzerland, as the Raiffeisen economists once again confirm. Last year, fewer new apartments were approved than at any time since records began 20 years ago.
Just how severe the housing shortage already is is shown by the small number of rental apartments advertised on internet portals and the vacancy rate across Switzerland, which is likely to soon fall below the psychologically important mark of one percent. "However, the strongest signal of scarcity is sent by asking rents, whose annual growth rose to 6.4 percent in the second quarter of 2024," says Hasenmaile.
©Keystone/SDA
English 
German 
French 
Spanish 
Arabic