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HOUSING MARKET

Swiss housing costs remain high: report

Despite a strong expansion in the supply of new housing, rents and prices for homes in Switzerland remain robust, although markets are overheated in some areas, a consultant’s report shows.

Swiss housing costs remain high: report
Photo: Mirko Grifoni

“In the most highly valued regions around Zurich, in central Switzerland and in the Lake Geneva region, the situation remains tight,” Wüest & Partner said of the apartment rental market in a report released on Thursday.

Low vacancy rates — as little as 0.1 percent in Zurich and Lausanne — and continued high demand for housing mean little sign of relief on the horizon for lower costs.

Rents for new apartments in the country’s two biggest cities kept rising in the second quarter of the year, the consultant said in its autumn monitoring report.
 
The median cost of a 100-square-metre apartment in Zurich rose to 2,500 francs ($2,700) a month, while rents for high-end suites of the same size were stable at 5,585 francs.

The cost of renting was even higher in Geneva, where average new apartments of 100 square metres fetched 3,000 francs a month and luxury equivalents commanded 5,850 francs.  

An increase in housing supply is expected to boost vacancy rates and put downward pressure on prices for condos and villas.
 
The consultant noted the construction industry invested 15 billion francs in multi-family housing last year and a further increase is expected this year.

Around 57,000 new apartments were completed in the summer, close to a record.

Immigration is continuing to keep demand for rental housing high and the fact that half of the new apartments built were marketed for sale rather than renting kept a lid on supply, the report indicated.

However, if the flow of foreigners to the country slows down significantly, Wüest & Partner warned rents for new apartments in the top categories will be the first to drop, particularly outside the big centres such as Zurich and Geneva.

But the consultant expects the price of villas to rise 2.8 percent over the next 12 months, while it predicts the cost of condos will increase 2.3 percent over the same period.

This marks a slowdown from recent annual increases of four percent or more.

The report said that around one-fifth of individual homes in Switzerland are in markets that are overheated because of high prices and rates of construction.

Such markets include the Zurich basin, the Lake Geneva area, municipalities with low taxes and coveted tourist areas.

The average transaction price for a typical villa in Switzerland was 825,000 francs in the second quarter, unchanged from earlier in the year.

But prices were more than double this in Geneva (2.36 million francs), Zurich (1.99 million francs) and resort communities such as Verbier (1.72 million francs).

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HOUSING MARKET

Swedish housing prices head south

The last three months show a distinct slowdown on the Swedish housing market, according to Sweden’s real estate statistics website Mäklarstatistik.

Swedish housing prices head south

”We now have enough information to say that there is a small dip in prices. And we still think that developments will stay calm over the next few months, with one percent up or down,” said Lars-Erik Nykvist, CEO at real estate agency Fastighetsbyrån to daily Dagens Nyheter (DN).

Apartment prices fell all across Sweden between June and August compared to the period covering March to May.

The statistics also show that the housing prices in Sweden’s bigger cities have fallen more than in less built up areas.

The biggest fall was in central Malmö where prices fell by 8 percent.

In Stockholm and Gothenburg the market fell by between 1 and 2 percent. House prices also decreased during the same period, according to Mäklarstatistik.

According to Nykvist there are many reasons for the slowdown of the market.

One of these is the record-high inventory of properties on the market.

However, the fear of increased interest rates is also ever present in the buyer’s mind, said Nykvist.

Swedish bank SEB presneted figures earlier in the week showing that Swedish households believe in falling housing prices in the near future.

However, according to Nykvist, it is unlikelt that Sweden will see any sudden changes up or down on the market in the near future.

Mäklarstatistik also analysed the effects of the mortgage ceiling, put into effect in October 2010.

”Many believed that the mortgage ceiling would make it difficult for first-time buyers to get onto the housing market and that this would lessen demand on small flats, especilally in smaller cities,” Nykvist said in a statement.

However, the analysis has not shown any indication that prices have fallen to a higher degree for small flats in city areas or that the prices have developed differently in different housing categories.

”It is however uncertain whether some groups have been excluded from the market, even if that is not reflected in the prices,” said Nykvist.

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