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Where property prices are rising the most in Switzerland

The Local Switzerland
The Local Switzerland - [email protected]
Where property prices are rising the most in Switzerland
A view of Zug in central Switzerland, where house prices have been going up. Photo by Florian Wehde on Unsplash

Property prices are continuing to go up in Switzerland despite higher mortgage rates, new figures show.

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As banks have cranked up interest rates to try and dampen inflation, mortgage rates have also climbed. 

But in Switzerland, the higher financing costs associated with rising interest rates have not slowed down demand - at least so far. 

New research has found that real estate prices continued to rise in Switzerland in the second quarter of this year.

Compared to the same period in 2022, single-family homes now cost 6.1 percent more, and apartments are 5.1 percent more expensive, according to the study by Raiffeisen Bank.

Where are the strongest increases?

The hikes differ according to the region, the bank found.

The highest increase for family homes was in central Switzerland, where prices have gone up 18.8 percent compared to the same period last year. It's followed by the eastern part of Switzerland, where real estate has increased by 9.8 percent. 

Prices rose less in the Bern region (3.4 percent) and in northwest Switzerland (3.3 percent).

When it comes to apartments, prices in the central Switzerland region rose the most (11.3 percent), while the Zurich region recorded the lowest price increases year-on-year (+1.4 percent).

House prices in urban areas have risen more strongly - at 7.3 percent - than in other districts, according to the research. 

Meanwhile, apartments in regions popular with tourists have also recorded a strong price increase of 7.9 percent.

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Why are prices going up?

Researchers say it's due to the scarce supply of housing in Switzerland which is driving demand. 

"In the struggle between low supply and higher financing costs due to interest rates, the supply shortage continues to have the upper hand," Fredy Hasenmaile, chief economist at Raiffeisen Switzerland, said.

READ ALSO: Why are Switzerland's property prices stable while they are dropping elsewhere?

In June the Swiss National Bank increased the key interest rate from 1.50 to 1.75 percent in a bid to combat inflation.

In Switzerland, new buyers should expect a a mortgage rate of around 3 percent, which is more than previously, but still lower than many other countries where inflation is worse. 

Experts have said that they expect house prices in Switzerland to tail off in the near future although no large-scale price declines are expected. 

READ ALSO: How is Switzerland managing to keep inflation so low?

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