Real estate price slowdown
Geopolitical uncertainties, global supply chain problems, rising key interest rates and fears of recession - although all of this could have a negative impact on the real estate market, the Swiss Real Estate Offer Index remained stable in July 2022 despite the clouded economic outlook.
In mid-June, the Swiss National Bank increased its key interest rate by 0.5 percentage points for the first time since 2007. As a result, rising mortgage costs are likely to dampen home demand. In July, the Swiss Real Estate Offer Index, which is compiled by the SMG Swiss Marketplace Group in cooperation with the real estate consulting firm IAZI, shows that the price expectations on the part of providers have not reduced so far. 0.2% more was asked for single-family houses than in the previous month. Condominiums were even advertised at 0.7% higher prices within a month.
Among other things, positive net immigration throughout Switzerland ensures stable demand. Nevertheless, a slowdown in price development is likely. "With the increased interest burden and the general increase in costs for maintenance and investments, living in your own home is becoming noticeably more expensive," says Martin Waeber, Managing Director Real Estate, SMG Swiss Marketplace Group. Accordingly, the purchase of single-family houses or condominiums could become less attractive.
Rents remain stable in July
Advertised rental prices also increased slightly last month by 0.3%. For the time being, the rental costs are only a slightly higher burden on the wallets of the tenants than in the previous month. However, this is likely to change soon: Depending on the energy source, the ancillary cost bills will result in significantly higher expenses due to the rising oil and gas prices. The situation for institutional investors is also changing with rising interest rates. In addition to real estate, they now have other investment options. The falling demand for investment properties could lead to reduced construction activity and thus to a shortage in the supply of rental apartments. It remains to be seen how asking rents will develop in the long term