Real estate market Prices continue to rise

Buying a home has become more expensive. Its feasibility is no longer present in many places.

As always there is active construction going on - in the picture: the Guggach housing development by the general contractor Allreal in the vicinity of the Zurich Bucheggplatz.

The asking prices for Swiss homes have risen once again in the 2nd quarter of 2015. Owner-occupied apartments increased by 1.6 percent compared to the same quarter the year before. Prices for single-family homes rose 2.2 percent. Although these figures lie under the peak growth rates of 2009 to 2013, the continuing high immigration rates and the prospect of negative short-term interest rates until the end of 2016 are still keeping the growth rates positive.

We expect that the annual price growth rates will draw closer to zero over the course of the year since the feasibility of buying a home is no longer present in many places. In the Lake Geneva region, where an average household has to spend just under 10 gross annual incomes for a medium property, the prices in the 2nd quarter of 2015 corrected by just under 4 percent compared to the previous year. In contrast, in the Zurich region where an average property costs about 8 gross annual incomes, the price growth rate was still positive. In Eastern Switzerland – the region with the highest feasibility – prices rose the strongest with more than 5 percent.

Maciej Skoczek is a real estate analyst with UBS CIO Swiss & Global Real Estate.

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