Property prices have risen sharply again in 2021, despite the coronavirus crisis. Individual property prices will continue to rise in 2022, as demand remains high, even in the face of rising mortgage interest rates, while supply declines. However, demand will be better distributed regionally.

After a small decline in the first quarter of 2021 (-0.1%), the house price index calculated by the Swiss Federal Statistical Office rose sharply in the^2nd quarter (+2.2%),^3rd quarter (+2.4%) and^4thquarter (+2.6%). Year-on-year, prices of owner-occupied homes in Switzerland rose by 7.3%; according to Wüest Partner , owner-occupied apartments rose by 6.7%, and single-family homes by 8.3%. This trend continued into early 2022, at least until the Russian invasion of Ukraine on February 24. According to the Swiss Real Estate Offer Index, in February 2022, owner-occupied apartments were listed, on average, for CHF 8,156 and single-family homes for CHF 7,241 per square meter. In just ten years, the price of single-family homes has risen by over 30%, and that of condominiums by over 40%. As many people work at least partly from home, despite the abolition of the telecommuting obligation, and therefore no longer commute as often, demand is also increasing outside the cities and conurbations.

Single-family homes

Single-family houseVacancy rate (June 2021)Statistics on properties offeredInclusion period (^2ndquarter 2021) Offered price* (median) Transaction price* Premium segment* Switzerland 0 .6% 2 .3% 60 days CHF 1'290'000 CHF 1'165'000 -Basel0.1%1, 2 % CHF 1'562'800 CHF 2'456'000CHF 3'234'000Berne0.2 %0.6 % CHF 1'414'940CHF 2'072'000CHF 2'775'000Geneva0.0 %8, 3 % CHF 2'223'870CHF 3'082'000CHF 4'474'000Lausanne0.1 %4.4 % CHF 1'800'710CHF 2'247'000CHF 3'230'000Zurich0.1 %0.6 % CHF 2'383'060CHF 3'341'000CHF 4'730'000

* Source: Swiss real estate market 2022|1, Wüest Partner, Zurich

Properties per floor

PPETotal vacancies (June 2021)Statistics on properties offeredInclusion period (^2ndquarter 2021) Offered price* (median) Transaction price* Premium segment* Switzerland 0 .5 % 4 .0 % 71 days 8 '000 CHF/m² 7 '900 CHF/m² - Basel 0.1 % 0, 8 % 10'430 ^CHF/m2 11'860 ^CHF/m2 19'200 ^CHF/m2 Bern 0,0 % 0,8 % 8'700 ^CHF/m2 10'230 ^CHF/m2 19'200 ^CHF/m2 Geneva 0,4 % 3, 4 % 15'790 ^CHF/m2 18'900 ^CHF/m2 41'400 ^CHF/m2 Lausanne 0.0 % 2.5 % 11'380 ^CHF/m2 13'580 ^CHF/m2 27'600 ^CHF/m2 Zurich 0.1 % 1.2 % 14'540 ^CHF/m2 17'070 ^CHF/m2 34'500 ^CHF/m2

* 4th quarter 2021, price per square meter (excluding parking spaces) | Source: Swiss real estate market 2022|1, Wüest Partner, Zurich

Property prices: home ownership is - and remains - popular

The arguments in favor of rising property prices still apply in 2022, despite the coronavirus crisis, the war in Ukraine and the uncertain outlook: in the face of low interest rates, government bonds that are still not an investment alternative, and demand that continues to outstrip supply, buying remains more advantageous than renting. What's more, in times of crisis, people's priorities change, and they aspire to security. They prefer to invest in material assets spared by the crisis, such as home ownership. What's more, many people have never spent as much time at home as they did during the pandemic. A good home is more important than it was before Covid-19. For all these reasons, property prices will continue to rise in 2022, but less strongly than in 2021. Wüest Partner expects single-family homes to rise by 3% and condominiums by 2.5%, while the consensus is for increases of 3% and 2% respectively.

Is the threat of a real estate bubble perceptible in Switzerland?

The UBS Swiss Real Estate Bubble Index measures the risk of a real estate bubble. It rose by 0.07 points in^Q4 2021, to 1.49 points. Between 1.00 and 1.99, the real estate market is considered overvalued, implying a higher potential for correction as soon as interest rates rise more than expected or the economy tends towards a longer-term crisis, for example due to a tense geopolitical situation. However, UBS experts believe that a price correction over the next 12 months is unlikely. They point out that the index was significantly higher in the early 1990s, when the real estate bubble burst and the economy plunged into recession. For demand to fall significantly and the market to correct prices, interest rates would have to rise sharply. However, experts expect that, given the complex situation in Europe, central banks will wait before raising their key rates.

What will happen to mortgage rates in Switzerland?

At the end of 2021, many experts were still forecasting a slight rise in rates. They were forecasting a range of 0.85 to 1.35% over the course of the year, for a 10-year fixed-rate mortgage. In March 2022, the forecasts were largely revised. Credit Suisse, for example, is forecasting an increase from 1.27 to 2.2% by the end of 2022. By historical comparison, this remains advantageous, which is why home ownership remains attractive.

01.04.2022

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About Cerise Immobilier gérance et courtage, real estate agency in Villars-sur-Ollon

Cerise Immobilier gérance et courtage is a real estate agency located in Villars-sur-Ollon in the canton of Vaud, Switzerland. We offer services in sales, purchases, rentals, PPE management, property valuations and tax and legal advice. We cover the Chablais region of Vaud, including the communes of Ollon, Gryon, Bex, Aigle, Les Diablerêts, Chessel, Leysin, Lavey, Noville, Roche, Yvorne and Villeuneuve.

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