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Even long-time market observers are amazed by this phenomenon. Real estate prices continued to increase last year. And this is despite the fact that interest costs have nearly tripled in the last few quarters. The average increase in house prices across Switzerland was 3.7 percent. Of course, not to the same extent in every canton.
The cantons of Bern, Jura and Valais recorded the lowest price increases. The highest fluctuations were seen in the cantons of Zug, Geneva and central Switzerland. “The price increase was only stronger during the pandemic,” real estate experts at Raiffeisen comment on this development. “There was a real price increase during that period, with prices increasing by 5 percent.”
This article was first published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
This article was first published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
Let’s look at a three, five and ten year comparison. It shows to what extent and at what pace prices are developing. For this, real estate expert Iazi examined house prices in Switzerland’s largest cities for “Handelszeitung”. Result: “Sought-after places have become even more sought-after,” says Donato Scognamiglio, founder and board member of Iazi. “Further price increases were achieved last year, especially in big cities, which are already quite attractive. “Although it’s not as fast as it used to be.”
Canton Zug passes Zurich on the right
The canton of Zug recorded the strongest explosion. In the city of Zug, condominium prices increased by 9 percent last year alone. When you look at the past decade, prices have increased by an incredible 88 percent. Similar things in surrounding communities. Thus, Zug surpassed the cities of Zurich and Geneva, which recorded the biggest price increases in the past. “In recent years the canton of Zug has become very attractive due to its economic strength and low tax policy,” says Donato Scognamiglio. “The canton of Zug turned on the indicator and passed everyone coming from the right.”
“Demand in the canton of Zuger far exceeds supply,” say real estate experts at Zuger Kantonalbank. “The main driver was and continues to be international migration, which has increased significantly compared to the previous year.” On average, each apartment building advertised for sale in Zug attracts almost 17 searchers. On average in Switzerland there are only two per apartment. Therefore, it is not surprising that this has political consequences. In June 2023, the popular initiative “2000 apartments for Zug’s middle class” was narrowly passed in the city of Zug. The initiative calls for accelerated construction of affordable housing.
Central Switzerland with high price increases
Cities that no one expected have also become significantly more expensive. This includes Giswil in the canton of Obwalden. Prices in the central Swiss city rose 61 percent, albeit from a low base. Today you pay 750,000 francs for a condominium there, while in the city of Zug this figure is 1.8 million. Hergiswil in the canton of Nidwalden is also in demand. In the past, many rich people settled here due to low taxes. As a result, prices increased by 59 percent in ten years. Today you pay 1,290,000 francs for an apartment in Hergiswil.
Prices have also increased significantly in holiday areas. In both Andermatt and Engelberg, apartments have become more expensive by around 50 percent in the last decade. An ongoing price dynamic. Last year St. House prices in St. Moritz increased by 14 percent, or 30 percent in three years. “This development has a strong connection with the Corona period,” says Donato Scognamiglio. “At that time, many people bought condos in the mountains, but the momentum waned, but the high prices remained.” It is becoming increasingly difficult to buy a house there, especially for local people.
If you cannot finance your own home in Zurich
The price level in the canton of Zurich has been unattainably high for a long time. However, price increases still occurred. While condominium prices in the city of Zurich increased by 6 percent last year, they increased by 51 percent in 10 years. Some cities in the canton even exceeded this high growth rate. Prices rose by 52 percent in the lakeside district of Horgen and by 56 percent in the industrial town of Dietikon. “Despite this, demand is high,” ZKB writes in its real estate report. This is surprising. Because Donato Scognamiglio says, “Even a member of the Bundestag can no longer afford to buy a house in Zurich.” “Gross income of 450 thousand is not enough for this.”
So how does it continue?
Momentum is weakening. With the increase in interest rates, the number of changes in hands in the domestic market decreased. In the last four quarters, significantly fewer home transactions were financed by UBS, CS, ZKB and Raiffeisen: 17 percent fewer detached houses and 18 percent fewer apartments than in the same period last year. In addition to real estate purchases, the number of new mortgages is also decreasing.
Apartment prices in the Bern region and eastern Switzerland fell slightly on an annual basis for the first time. However, price reductions are limited. “Competition among home seekers is still great and provides stability to the market,” says Donato Scognamiglio. “The influx into Switzerland is also still high due to strong economic performance.” Anyone counting on sharply falling prices is likely to be disappointed.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
