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Switzerland sees dip in property prices and rents

The Local Switzerland
The Local Switzerland - [email protected]
Switzerland sees dip in property prices and rents
Rents and property prices cost less now but are likely to increase soon. Photo: Claudio Schwarz on Unsplash

Rents and the cost of properties have been increasing steadily in Switzerland in the past months, but tenants and homeowners can now breathe a sigh of relief — even if briefly.

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Finally there is a bit of good news on the property market: in January, rents as well as prices for single-family homes and apartments fell slightly in Switzerland, according to the Swiss Real Estate Offer Index compiled in collaboration with real estate consultancy CIFI and SMG Swiss Marketplace Group.

For owned accommodation, prices of houses decreased by 0.7 percent, and those of apartments by 0.6 percent.

The reason is that higher mortgage rates are slowing down the demand for properties, prompting sellers to lower their prices, the report notes.

READ MORE: Swiss mortgage rates 'climb drastically' with more hikes on the way

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As for rents, they dropped by of 1.1 percent on average.

However, there are some regional disparities as well: while Ticino’s prices fell by 2.8 percent, in the northwestern part of the country they increased by 0.3 percent.

While this overall decline in housing prices is a positive development in a country where rents and properties are notoriously expensive, it is likely a temporary phenomenon.

“Given the strong demographic growth, the low rate of new constructions, and low vacancy rates in city centres, this effect could dissipate quickly," the report says.

Additionally, after Switzerland’s central bank raised its key interest rates three times in 2022 — and announced the likelihood of further hikes this year — mortgages are expected to increase sharply and could reach 3 to 4 percent this year.

This means that both property prices and rents will experience hikes as well.

READ MORE: Switzerland set for another interest rate hike, central bank chief warns

 
 

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