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Overview of Real Estate Market in Switzerland

Overview of Real Estate Market in Switzerland

Analysts forecast that in Switzerland GDP will grow by 1.7% in 2018 and that there will be a slight decline in unemployment. The recovery of the relevant indicators of the Eurozone will also have a positive impact on the local economy. As a result, household income will increase, which should lead to an increase in housing demand. However, the growth in mortgage interest rates will have a certain impact, due to this fact the purchasing activity in 2018 will not actually change.

Construction Activity

In 2018, experts predict the construction of 21,200 housing units throughout Switzerland. At the same time, the most affected by the slowdown of the construction sector will be the segment of apartments. The construction of 13,800 apartments is expected to be completed. It is 5.5% less than in 2017. At the same time, there will be less private houses than a previous year, only 1.1% (around 7400). Taking into account the growth in demand and a reduction in construction activity, analysts expect a shortage of supply in the housing market, which will inevitably lead to a further increase in prices.

Prices for Housing

There was a temporary decline in costs for houses and apartments in the winter of 2016/2017. However, it was only a small pause after 14 years of continuous growth. In addition, in the second half of 2017, there was positive dynamics again. Specialists predict that in 2018, prices for private homes will rise by 2.5%, and apartments – by 2%.

The level of Immigration

As for the immigration, 2017 was the fourth year of the decline in net migration in a row. The difference between those who left the country and those who arrived amounted to only 52 000 people. This is 12% less than a year earlier. Nonetheless, the situation has been stabilized in the fourth quarter of 2017. Specialists predict that in 2018, the level of net migration will stagnate reaching 50 000 people. Together with the improvement of the economy, this will lead to the fact that the demand for rental housing will stay high.

Rental Housing

As rental housing is being built more and more and immigration is stagnating, the demand for rental property is insufficient. In 2017, this has led to the fact that the authors of 4% of ads on online portals have reduced the cost of rent. As a result, the annual rate fell by an average of 0.2% across the country. Analysts expect that rental rate will fall by 1% more.

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