In its Real Estate Monitor report for the fourth quarter of 2012, the bank says the recent rise in property prices is unlikely to continue because of regulatory restraints intended to cool Switzerland’s hot market.
“The fact is that the new regulatory provisions will have an effect sooner or later,” the report, released on Wednesday says.
“They have raised the barriers on the financing of residential property.”
The report notes that a slower growth in the number of mortgages granted to private households “shows that the new rules are curbing the demand for residential property.”
Many mortgage providers have also reined in ambitious mortgage targets either under pressure from FINMA, the Swiss Financial Market Supervisory Authority, or of their own accord, the report says.
However, Credit Suisse said it seems to be taking some time for the impact of these regulatory restrictions to show up in the data.
And a “real trend reversal — meaning a lasting price correction” is not in the cards, the bank said.
Financial authorities have been worrying for some time about the prospect of a bubble developing in the real estate market, particularly in places such as the Lake Geneva and Zurich regions.
Conditions have stopped just short of the bubble scenario but prices have remained remarkably robust given the slowdown in the economy.
But Credit Suisse says the prices have continued to rise this year because of the “dynamic demand and constraints on supply”.
Continued strong immigration is one of the factors driving supply.
Net migration for the first ten months of the year was just 1.3 percent lower than for the same period in 2011.
This points to an annual net immigration of 65,000 to 70,000.
Record low interest rates and “respectable growth in real wages” driven by a drop in consumer prices are helping prop up demand for housing.
At the same time builders are unable to keep up with demand due to bottlenecks, “stuctural problems” in the construction industry and cold weather at the beginning of the year.
Credit Suisse expects the number of new housing units is likely to fall short of the 48,000 built last year.
An initiative to restrict the construction of secondary residences, which comes into effect next year, has boosted the number of applications for new homes, up 23 percent this year from 2011.
But there is also generally more intensive project development work under way, keeping planners and architects busy, the report says.
This helps explain why condominium prices rose two percent year-on-year in the third quarter, according to data from Wüest & Partner.
Prices for single-family homes increased 0.9 percent over the same period.
The national vacancy rate at June 30th of 0.94 percent — equating to 38,922 residential units — remains below the average 0.98 percent for the period going back to 1980, Credit Suisse said.
To read the full Real Estate Monitor report click here.