Swiss real estate gives up some of its recent gains (2024)
On 15 May 2023, the Federal Statistical Office published its latest residential property price index. During the first quarter of 2023, average Swiss home prices fell by 1.2%, leaving them 3.9% higher than a year before.
Stand alone houses dropped in price by 1.3% while apartments lost 1.1% of their value over the three months to 31 March 2023. Homes losing the greatest value during the quarter were stand alone houses in rural areas (-4.5%). Apartments in smaller urban setting lost 1.5%. At the same time, stand alone home prices in smaller urban settings and large city commuter belts rose on average by 0.3%.
By 31 March 2023, the residential price index had risen by 14.6% since the end of 2019.
A map published by FSO shows quarterly price changes by residential property and commune type. However, the results are not geographically specific. For example, an average stand alone home rose by 0.2% in Zurich, Geneva, Basel-City and Bern. while an average apartment in these cities fell in price by 1.2%. The results are the same for these cities because they fall into the same commune category.
As a seasoned real estate analyst with a track record of delving into the intricacies of property markets, I've closely followed the latest developments in the Swiss real estate landscape. My expertise is underscored by a deep understanding of economic indicators and statistical analyses in the housing sector. Now, let's break down the key concepts embedded in the Federal Statistical Office's recent publication regarding the residential property price index in Switzerland.
Federal Statistical Office (FSO):
The FSO is the authoritative body responsible for collecting, analyzing, and disseminating statistical information in Switzerland. It plays a pivotal role in providing reliable data that sheds light on various aspects of the country's economy, including the real estate market.
Residential Property Price Index:
The residential property price index serves as a crucial metric for assessing the fluctuations in housing prices over time. In this context, the FSO's index indicates changes in average Swiss home prices during the first quarter of 2023.
Average Home Price Changes:
According to the FSO's report, the average Swiss home prices experienced a decline of 1.2% during the first quarter of 2023. Importantly, this figure is framed within the broader context of a 3.9% increase compared to the same period the previous year.
Property Types - Stand Alone Houses and Apartments:
The report distinguishes between stand-alone houses and apartments, revealing nuanced trends within these categories. Stand-alone houses, on average, witnessed a drop of 1.3%, while apartments experienced a slightly lower decrease of 1.1% during the three months leading up to March 31, 2023.
Regional Variations:
The data further dissects regional variations, highlighting that stand-alone houses in rural areas faced the most significant depreciation, with a substantial 4.5% decrease in value. Conversely, stand-alone home prices in smaller urban settings and large city commuter belts rose by an average of 0.3%.
Commune Category and Geographical Specificity:
The FSO introduces the concept of commune categories to explain why certain cities, such as Zurich, Geneva, Basel-City, and Bern, exhibit similar trends. In these instances, average stand-alone home prices rose, while apartment prices fell. This underlines the importance of considering commune categories when interpreting the data.
Overall Residential Price Index Growth:
From the end of 2019 to March 31, 2023, the residential price index in Switzerland recorded a notable increase of 14.6%, showcasing the overall growth trajectory in the real estate market over this period.
Mapping Price Changes:
The FSO provides a visual representation of quarterly price changes through a map, emphasizing variations by residential property and commune type. However, the article notes that the results lack geographical specificity, highlighting a potential limitation in the granularity of the data.
In conclusion, this comprehensive breakdown of the FSO's publication illustrates the multifaceted nature of the Swiss real estate market, encompassing factors such as property types, regional dynamics, and commune categories. My in-depth analysis and familiarity with these concepts contribute to a nuanced understanding of the complexities inherent in the evolving landscape of Swiss residential property prices.
A low rate of new construction overall and accelerated immigration mean a price correction is unlikely in the near future. In the medium term, the imbalances in the market should at least remain stable due to rising rents.
The moderate growth rate in Switzerland is beneficial for those looking to invest in property because it provides stability and predictability. The moderate growth rate ensures that property values remain relatively consistent, making it a safe and reliable investment.
Differences in local tax levels are also reflected in housing costs, with higher demand in municipalities where taxes are low. This effect is further reinforced by progressive tax levels.
While there are numerous benefits to living in Switzerland, there are also some drawbacks to consider: High Cost of Living: As mentioned earlier, the cost of living in Switzerland is considerably high. This extends beyond just housing and includes groceries, dining, and general entertainment.
If you are a family, you can expect to spend between 4000 and 8000 Swiss francs per month on living expenses. If you are a single person, you can expect to pay between 2500 and 4000 Swiss francs per month on living expenses. These costs can vary depending on your lifestyle and where you live in Switzerland.
The average house in Switzerland costs 1.19 million Swiss francs, which is currently 1.34 million US dollars and 1.08 million British pounds. However, there are significant regional variations.
A lot of food in Swiss supermarkets comes from Switzerland (the Swiss are nationalistic about this). Labour is very expensive in Switzerland. Given that farming is labour intensive, food is expensive. Expensive labour is also the reason why restaurants are very expensive.
The real estate industry is adjusting to higher financing costs, but the business environment is becoming more favourable due to progress on inflation and potential global interest rate cuts. This is expected to boost investor confidence and revive transaction activity in 2024.
According to the UBS Real Estate Bubble Index, the risk of the real estate bubble bursting is low. The index has fallen from 1.49 to 1.41 and is thus well below the level of the early 1990s (2.60), when the real estate bubble burst and property prices in Switzerland collapsed by up to 40 percent.
The sluggish economy in the eurozone and interest rate rises in many countries will continue to have an impact on the Swiss economy next year. The State Secretariat for Economic Affairs (SECO) is forecasting GDP growth of 1.1%, down from 1.3% in 2023, the second year in a row that growth will be well below average.
In Europe, homeownership is a deeply rooted part of society. Most young people are taught that owning a home is important and a good investment. In contrast, in Switzerland, the culture of renting is very strong. Naturally, this is a main reason for low rate of homeownership.
Address: Apt. 203 613 Huels Gateway, Ralphtown, LA 40204
Phone: +2135150832870
Job: Regional Design Producer
Hobby: Nordic skating, Lacemaking, Mountain biking, Rowing, Gardening, Water sports, role-playing games
Introduction: My name is Fredrick Kertzmann, I am a gleaming, encouraging, inexpensive, thankful, tender, quaint, precious person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
