A rise in condo prices of just 0.8 percent is forecast nationally, down from more than three percent in 2013, although the Swiss market remains very diverse, said Zurich real estate consultants Wüest & Partner in their spring “Immo-Monitoring report, released on Tuesday.
Out of the 2,400 municipalities in Switzerland, 500 last year saw the price of apartments decline, while the price of villas fell in 400 communities, according to the report.
The biggest contraction in prices is expected in the canton of Geneva, where a 3.5 percent fall is predicted for 2014.
But overall, low interest rates will help maintain demand, aided by forecast economic growth of as much as 2.3 percent, the consultants say.
Prices of individual houses are expected to rise by 1.8 percent, down from four percent last year, with an increase in supply held in check by scarcity of available land for residential construction.
Prices of apartments are expected to moderate as a result of increased supply from new construction in some markets, Wüest & Partner indicated.
Clearly a slowdown in the property market is seen after Swiss housing prices in the past decade rose 45 percent, the consultants’ report said.
The overall value of residential property in Switzerland has grown to hit 2.4 trillion francs.
Municipalities regarded as “expensive” are typically seeing prices for condos fall slightly while areas seen as inexpensive are gaining ground, the report said.
Condo prices in Zurich, Switzerland’s biggest market, are expected to see average increases of 0.8 percent, with new construction dampening rises that last year reached more than three percent and in 2006 jumped by over six percent.
Wüest & Partner expects the cost of rental accommodation to edge up by 1.4 percent this year and considers it likely that rents will continue to rise over the next six years.
This is in spite of the fact that long-term tenants benefited from a 2.9 percent reduction in rents at the beginning of this year because of a drop in the national “reference rate” used to calculate allowable rent increases.
The increase in immigration has been a great factor driving rents up, and to a lesser extent housing prices.
Wuest & Partner’s report does not speculate on the impact of the February 9th referendum that called for quotas for immigrants from the European Union.
But it says immigration will remain strong for 2014 and is one of the reasons upward pressure will remain on rents.