Property market: Are Swiss house prices set to fall in 2024?
House prices in Switzerland continued to increase in 2023. If you are wondering what 2024 has in store, here are some predictions.
The Swiss Marketplace Group (SMG) has compiled, along with the real estate consulting company IAZI, an index that shows the development of rents as well as prices for residential properties.
It is not exactly a surprise to anyone, that housing is becoming more and more expensive in Switzerland. Unsurprisingly, the highest rents are in the Zurich area. On the other hand, the price increase for residential properties has eased somewhat.
This is shown by the Swiss Real Estate Offer Index published on Thursday. It is an index that shows the development of prices for Swiss residential properties.
Sellers continue to raise asking prices
However, according to the index, sellers of residential property in Switzerland are still raising their asking prices – though the increase within residential property is relatively moderate when compared to the rental market.
Those hoping to buy a detached property or a condominium in Switzerland also had to dig deeper into their pockets at the end of last month.
Yet, at +0.3 percent in both property categories – single-family house and condominium – sellers have only moderately increased their asking prices.
Increases in both categories, single-family houses and condominiums, could also be observed throughout the year. The former rose by +1.1 percent while the latter rose by +2.1 percent in the year.
Perhaps unsurprisingly, in the owner-occupier market, a mostly very high price level paired with low availability have made securing a home challenging for market newcomers around Switzerland.
What are the pricing predictions for 2024?
According to Houzy, a Zurich-based home ownership platform, most real estate experts currently assume that the real estate market will stabilise at a high price level. However, for 2024, they predict that housing prices will either stabilise or slightly fall.
There is presently little evidence of a stronger correction (-10 percent or more), despite the Swiss real estate market’s high value.
As per 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 therefore well below the level of the early 1990s (2.60), when the real estate bubble burst and property prices in Switzerland fell by up to 40 percent,” Houzy states.
In the summer, NZZ also reported that from 2024 onwards, Credit Suisse economists expect price declines in the low single-digit percentage range per year due to shrinking demand.
READ MORE: Rents to cost of living: What will happen to the Swiss economy in 2024?
Meanwhile, Houzy explained that property demand is expected to remain high into 2025 – for five reasons.
Firstly Switzerland will require housing for around 100,000 new residents every year. The country’s small size also means that building land is unfortunately scarce and as such only released very restrictively.
The fact Switzerland’s strict zoning plans, approval procedures and objections hinder construction work was also given as a reason along with the fact the country’s stringent requirements make the construction of dense additions, conversions, and new buildings more difficult.
And lastly, five, the supply rate – 1.6 percent for houses and 1.8 percent for apartments – is historically low.
Risks remain
Though inflation may be back under control and interest rates are low by international standards, Houzy writes that there are more risks that could impact the Swiss real estate market – such as war-related geopolitical uncertainties or the country’s strong dependence of its export-oriented economy on global demand.
Yet, real estate prices could ease slightly from 2025.
According to the platform, the property supply could increase for two reasons, “the proportion of working residents is falling and the most populous people born in 1964 will retire in 2029”.
Experts also expect that baby boomers will either inherit or sell more than 400,000 properties between 2030 and 2045. This suggests falling real estate prices in the future.
READ MORE: Buying property in Switzerland: Can foreign nationals get a mortgage?
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The Swiss Marketplace Group (SMG) has compiled, along with the real estate consulting company IAZI, an index that shows the development of rents as well as prices for residential properties.
It is not exactly a surprise to anyone, that housing is becoming more and more expensive in Switzerland. Unsurprisingly, the highest rents are in the Zurich area. On the other hand, the price increase for residential properties has eased somewhat.
This is shown by the Swiss Real Estate Offer Index published on Thursday. It is an index that shows the development of prices for Swiss residential properties.
Sellers continue to raise asking prices
However, according to the index, sellers of residential property in Switzerland are still raising their asking prices – though the increase within residential property is relatively moderate when compared to the rental market.
Those hoping to buy a detached property or a condominium in Switzerland also had to dig deeper into their pockets at the end of last month.
Yet, at +0.3 percent in both property categories – single-family house and condominium – sellers have only moderately increased their asking prices.
Increases in both categories, single-family houses and condominiums, could also be observed throughout the year. The former rose by +1.1 percent while the latter rose by +2.1 percent in the year.
Perhaps unsurprisingly, in the owner-occupier market, a mostly very high price level paired with low availability have made securing a home challenging for market newcomers around Switzerland.
What are the pricing predictions for 2024?
According to Houzy, a Zurich-based home ownership platform, most real estate experts currently assume that the real estate market will stabilise at a high price level. However, for 2024, they predict that housing prices will either stabilise or slightly fall.
There is presently little evidence of a stronger correction (-10 percent or more), despite the Swiss real estate market’s high value.
As per 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 therefore well below the level of the early 1990s (2.60), when the real estate bubble burst and property prices in Switzerland fell by up to 40 percent,” Houzy states.
In the summer, NZZ also reported that from 2024 onwards, Credit Suisse economists expect price declines in the low single-digit percentage range per year due to shrinking demand.
READ MORE: Rents to cost of living: What will happen to the Swiss economy in 2024?
Meanwhile, Houzy explained that property demand is expected to remain high into 2025 – for five reasons.
Firstly Switzerland will require housing for around 100,000 new residents every year. The country’s small size also means that building land is unfortunately scarce and as such only released very restrictively.
The fact Switzerland’s strict zoning plans, approval procedures and objections hinder construction work was also given as a reason along with the fact the country’s stringent requirements make the construction of dense additions, conversions, and new buildings more difficult.
And lastly, five, the supply rate – 1.6 percent for houses and 1.8 percent for apartments – is historically low.
Risks remain
Though inflation may be back under control and interest rates are low by international standards, Houzy writes that there are more risks that could impact the Swiss real estate market – such as war-related geopolitical uncertainties or the country’s strong dependence of its export-oriented economy on global demand.
Yet, real estate prices could ease slightly from 2025.
According to the platform, the property supply could increase for two reasons, “the proportion of working residents is falling and the most populous people born in 1964 will retire in 2029”.
Experts also expect that baby boomers will either inherit or sell more than 400,000 properties between 2030 and 2045. This suggests falling real estate prices in the future.
READ MORE: Buying property in Switzerland: Can foreign nationals get a mortgage?
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