Property Market Switzerland
There are signs that a decade of positive price development in the rental-housing sector is now coming to an end after asking rents stagnated at a national level in the second quarter of 2010.
However, a general trend reversal is unlikely in this market segment. Firstly, due to the nature of the Swiss residential market rental levels to some extent move in line with interest rates. As such the inevitable future rise in interest rates will lead to an increase in market rents. Secondly, once interest rates start to rise, rental accommodation is likely to emerge as the preferred housing option above owner-occupied apartments as the latter become less affordable to prospective homeowners.
There is strong demand for multi-family houses as an investment alternative, both amongst private and institutional investors - a trend that is largely driven by the low interest rate levels and uncertainties regarding the future development of infl ation. Even older properties in peripheral locations are currently sought after, as indicated by the high and rising levels of observed transaction prices.
The overall price trend in Switzerland’s single-family housing sector remained positive during the second quarter of 2010. Furthermore, the current low interest rate level is likely to help sustain demand for residential property, so that prices look set to increase further. However, given the moderate overall development, the risk of a price bubble remains low in this segment.
An upward trend in asking prices for single-family houses can still be seen in Saanen/Gstaad and St. Moritz, while transaction prices in most tourist regions now tend to move sideways at consistently high levels.