Demand for condominiums remains high
According to the IAZI index, prices for residential property are rising again across Switzerland as a whole, although they are still below the long-term average price growth. Demand for condominiums is particularly brisk.
The "SWX IAZI Private Real Estate Price Index" for single-family houses and condominiums shows an increase of 1.2 percent in the third quarter of 2016 (previous quarter: 0.3%, change: +0.9%). On an annual basis, price growth has also increased. It amounted to 2.3 percent in the third quarter (previous quarter: 1.1%; change: +1.2%). The long-term average price growth for residential property is 2.8 percent, with an observation period of 30 years.
According to IAZI experts, the stronger price growth for residential property is primarily based on the continued brisk demand for condominiums. "Classic single-family homes have become too expensive for a large proportion of prospective buyers and are being purchased less and less," says Donato Scognamiglio, CEO of IAZI AG. "In addition, the imputed mortgage interest rate of up to five percent further restricts the group of potential buyers."
Compared with the previous quarter, the growth rate for condominiums is higher in the third quarter of 2016, at 1.5 percent (previous quarter: 0.7%; change: +0.8%). On an annual basis, the growth rate is 4.5 percent (previous quarter: 2.7%; change: +1.8%). This means that the growth rate for condominiums is above the long-term average price growth.
Single-family houses with slight increase, multi-family houses stagnate
The growth rate for single-family homes is also higher, with a slight increase of 0.7 percent in the third quarter (previous quarter: -0.2%; change +0.9%). On an annual basis, price growth amounts to 0.2 percent (previous quarter: -0.3%; change +0.5%).
The growth rate for multifamily housing increased by 0.4 percent compared with the previous quarter and now stands at zero percent. On an annual basis, the growth rate has stagnated at -0.1 percent (previous quarter: -0.1%).
The performance (net cash flow yield and the increase in value) of multifamily properties was 0.9 percent in the third quarter (previous quarter: 0.5%; change +0.4%). On an annual basis, performance stagnated at 3.5 percent (previous quarter: 3.5%).
In the case of single-family houses, the cantons of Solothurn (-2.4%), Grisons (-3.4%) and Geneva (-3.6%) show quite significant price declines on an annual basis, according to IAZI researchers. In the case of condominiums, on the other hand, no price declines were observed on an annual basis. Here, there are partly high price increases, e.g. in the canton of Neuchâtel (+7.4%), in Thurgau (+7.2%) as well as in Aargau (+7.0%). (ah)
