Zurich: Transaction prices for residential property stagnate

After transaction prices, i.e. the prices of actual sales, have risen dynamically in the canton of Zurich in recent quarters, they remain stable in the third quarter, according to surveys by ZKB. "We do not believe that this is just an interim low," ZKB researchers write. Mainly because of the historically low mortgage interest rates, the financing of residential property even became more favorable again in the third quarter, they say. "However, due to high prices and regulation, this now only has a limited impact on homeownership demand," the ZKB experts said. "That's why we expect only slightly rising home prices in the coming quarters."

In contrast to the stable transaction prices, asking prices on the Homegate.ch portal also rose in the third quarter of 2016, according to the ZKB analysis. In Switzerland, growth was just under one percent, and as much as 1.6 percent in the Zurich economic area. In the second quarter, asking prices had already risen by a similar amount. However, due to the development in transaction prices, the ZKB researchers also expect subdued price growth for asking prices.

ZKB believes that the rental market has already peaked, as market rents are barely moving, both in the canton of Zurich and throughout Switzerland. According to the researchers, negative interest rates are the main factor affecting supply: The construction of multi-family houses is attractive for investors, and construction activity is high. Immigration, on the other hand, is declining, which is weakening demand. "Therefore, rents will continue to come under pressure," ZKB predicts. (ah)