IAZI: Demand for condominiums intact
In the second quarter of this year, prices for residential property in Switzerland increased slightly. The "SWX IAZI Private Real Estate Price Index" for single-family houses and condominiums shows an increase of 0.3 percent.
Donato Scognamiglio, CEO of IAZI AG, on developments in the Swiss house and apartment market in the second quarter of 2016
In the first quarter, the price increase had still amounted to 0.9 percent. Price growth has also slowed on an annual basis. It now amounts to 1.1 percent (previous quarter: 1.6 %; change: -0.5 %). Prices for residential property are currently rising only thanks to the intact demand for condominiums, writes IAZI. "Condominiums are highly in favor with the aging baby boomer generation," says Donato Scognamiglio, CEO of IAZI AG and professor of real estate finance at the University of Bern. Apartments are easier to maintain than single-family homes, and if you can afford it, the decision is often made quickly.
Price growth for condominiums slows
Prices for condominiums still rose by 0.7 percent in the second quarter, compared with 1.8 percent in the previous quarter. On an annual basis, the growth rate is 2.7 percent (previous quarter: 3.0 %; change: -0.3 %). The growth rate is thus slightly below the long-term average price growth of 2.8 percent. By contrast, the growth rate for single-family homes was lower in the second quarter, at minus 0.2 percent (previous quarter: 0.0 %; change: -0.2 %). On an annual basis, the growth rate in this segment was minus 0.3 percent (previous quarter: +0.2 %; change: -0.5 %).
Slight decrease for multi-family houses
Despite the investment emergency, the growth rate for multifamily houses was slightly negative in the second quarter (-0.4 %; previous quarter: +0.4 %; change: -0.8 %). On an annual basis, however, the decline in prices here was marginal at minus 0.1 percent (previous quarter: +0.1 %). The performance of multifamily housing was 0.5 percent in the second quarter (previous quarter: 1.3 %; change: -0.8 %). On an annualized basis, performance declined slightly to 3.5 percent (previous quarter: 3.7 %; change: -0.2 %). Performance is defined as the total return, which includes the net cash flow return as well as the increase in value.
Development in the Swiss cantons
Looking at the Swiss cantons, IAZI notes: In the second quarter of 2016, above-average price development on an annual basis could no longer be observed for single-family homes in any canton. Declining prices were observed in nine cantons. The highest price reductions were observed in the cantons of Geneva (-4.7 %), Jura (-3.9 %) and Graubünden (-3.2 %).
The situation is different for condominiums. Annual price increases above the long-term average price growth of 2.8% were recorded in twelve cantons, and in some cantons these increases were even quite significant. For example, in the canton of Basel-Stadt (+5.5 %), in the canton of Neuchâtel (+5.3 %) and in Thurgau (+5.1 %). Declining prices were only observed in the canton of Geneva (-1.3 %), Jura (-0.8 %) and Graubünden (-0.4 %). (mr)
