Credit Suisse sees end of real estate boom

Will Switzerland soon have too much office space? Keystone

In its 2014 report on the state of the Swiss property market, Swiss bank Credit Suisse predicts an end to the “gold-digger mood” that has prevailed in recent years. The report cites tougher regulations as well as the recent vote to curb immigration as reasons.

This content was published on March 5, 2014 - 14:15 and agencies

According to Credit Suisse’s real estate analysts, the housing market will remain stable for the time being. Rising prices in greater Zurich, central Switzerland and in the Lake Geneva region will lead to a shift in demand in more affordable areas.

It’s a different story for office buildings. “The market for office space is heading for an increasing oversupply which is likely to result in more rent reductions and valuation corrections in the course of this year,” stated the report, published on Wednesday.

The Credit Suisse economists believe that the residential rental sector can “count on a further year of robust demand, but is moving in the wrong direction in planning terms”. They said that while demand is based in urban areas, too much capital is being invested in housing in rural areas.

Regulations such as the countercyclical capital buffer (CCB) for banks that give mortgage loans also had an effect, continued the Credit Suisse report. In a statement earlier this year, the Swiss National Bank (SNB) said that “imbalances on the Swiss residential mortgage and real estate markets have increased further since the [cabinet] activated the CCB in February 2013”.

The SNB suggested that the CCB be increased from 1% to 2% of risk-weighted positions secured by residential property situated in Switzerland; the cabinet approved the proposal in January.

Slowdown aside, the Credit Suisse report did not foresee a real estate crash anytime soon, saying that only a strong increase in interest rates or an economic crisis could bring the market out of step.

In compliance with the JTI standards

In compliance with the JTI standards

More: SWI certified by the Journalism Trust Initiative

Sort by

Change your password

Do you really want to delete your profile?

Your subscription could not be saved. Please try again.
Almost finished... We need to confirm your email address. To complete the subscription process, please click the link in the email we just sent you.

Discover our weekly must-reads for free!

Sign up to get our top stories straight into your mailbox.

The SBC Privacy Policy provides additional information on how your data is processed.