Buying real estate is still very popular, despite the recent reversal of the SNB’s monetary policy. The rise in interest rates has not affected the appetite of Swiss men and women for home ownership. The Raiffeisen transaction price index shows that residential property prices rose once more in the second quarter of 2022. To acquire a single-family home, you had to pay 1.3% more than in the previous quarter.
The increase in prices for condominiums (PPE) was even more pronounced with a rise of 3.5%. Compared to the second quarter of 2021, the price of single-family homes increased by 8.7%. The PPE is trading 7.7% more expensive than a year ago. The price dynamics in the residential property market therefore continued.
Different developments depending on the region
So much for the portrait at the national level. But what regarding the distribution of price changes by region and type of municipality? According to the same index for the second quarter, French-speaking Switzerland leads the way with price growth of 12.8% over one year for single-family homes.
In the PPE segment, the increase is a little less marked at 8.6%. By filtering by type of municipality, house prices rose more markedly in one year in rural municipalities (+12.0%) and centers (+8.7%) than in other types of municipality. As for the PEPs, the highest price increases were recorded in tourist towns (+10.6%), as well as in mountain resorts. Unlike individual houses, it is in rural municipalities that the price increase for PPE has increased the least, with a “moderate” increase of 5.1%.
A trend that will continue
The sudden rise in interest rates was not enough to alter the rise in real estate prices. Despite very high prices, demand is still very strong, because the desire to own its walls remains present. In addition, the diversity of financing solutions makes ownership even more attractive than renting. This is particularly the case with short-term fixed mortgages, variable rate mortgages or SARON mortgages. Added to this is the shortage of real estate supply, which is helping to push prices up. However, rising financing costs continue to narrow the circle of buyers already limited by the current level of prices, as well as solvency and capital requirements.
On the supply side, the property market is now almost dry. New properties are becoming rarer and existing owners do not seem very interested in selling their apartment or house. This leads to a decrease in the number of properties for sale and a reduction in marketing times. In this context, prices are very likely to continue to rise in the medium term, even if demand has slackened somewhat in the meantime. At most, a slightly weakened upward momentum in prices might gradually set in. The dreaded correction is therefore not in the news.
