Pandemic pushes Swiss house prices higher

Consumer prices have risen sharply in Switzerland, increasing the attractiveness of tangible assets such as residential property © Keystone / Christian Beutler

The value of residential property in Switzerland continued to rise strongly in 2021 in the wake of Covid-19. Property prices are likely to rise further this year, according to an analysis.

Owners of freeholder apartments saw an increase in value of 7.3% over the course of the year. The increase for single-family houses was almost as high at 6.9%, revealed the Swiss Real Estate Offer IndexExternal link, published on Tuesday. This is compiled by the Swiss Marketplace Group /ImmoScout24 in cooperation with real estate consultancy IAZI.

The reasons given for this are the pandemic-related change in housing needs and solid economic development. In addition, immigration is continuing, and the supply of land is becoming increasingly scarce, the report said. At the same time, consumer prices have risen sharply. This further increases the attractiveness of tangible assets such as residential property.

Homeowners were not the only potential winners last year, ImmoScout24 added. Tenants looking for somewhere to live could benefit from an average decline in asking rents of at least 0.3% across the country.

The overall trend for rent to be reduced was due to a “real year-end spurt”. In December alone a drop of 0.9% was registered nationwide.

Going up

In the new year property prices are likely to continue to rise, according to ImmoScout24. Whether the trend reverses depends on the monetary authorities, it said.

The US Federal Reserve has announced that it will raise the key interest rate faster than planned. Should the European Central Bank (ECB) and the Swiss National Bank (SNB) follow suit, price declines are to be expected in Switzerland, said Martin Waeber, Managing Director Real Estate at the Swiss Marketplace Group. However, such a move by the SNB is currently considered very unlikely by the market.