Navigation

Skiplink Navigation

Main Features

Good outlook for housing market

The Swiss real estate sector has recovered from its nadir of the 1990s, according to a report from the Economic Research Department of Credit Suisse.

The Swiss real estate sector has recovered from its nadir of the 1990s, according to a report from the Economic Research Department of Credit Suisse.

The 1990s real estate crisis was rooted in the boom years of the previous decade when the economic feel-good factor caused an over-production of commercial property. This led to a market crash which spread to the residential market as the recession took hold.

But Credit Suisse says the demand for both commercial and residential property has now recovered for two main reasons.

"One is a demographic trend," says Credit Suisse’s Martin Neff, "Baby boomers are now at an age when they’re setting up house and having children. That means they need more space. As for commercial property, businesses are tending to expand outside of city centres because of the lack of space."

There are huge regional differences in the demand for commercial space, however, with Zurich, Geneva and Basel seeing the highest growth rates.

In both the commercial and residential sectors, the price also depends very much on the location. Neff says that an average family home in parts of eastern Switzerland, the west or canton Ticino costs around SFr500,000. But in Zurich, it costs around SFr1.2 million and in some places like canton Zug, the sky’s the limit.

The report will make pleasant reading for the construction industry which was badly hit by the real estate crisis.

"New flats are very much sought after and that is encouraging new building work," says Martin Neff. "We guess that in the mid to long term the market could absorb 35,000 to 40,000 flats every year."

Switzerland remains the odd country out in Europe for its high rate of rented accommodation. Just over 30 per cent of people own their own homes compared with figures of 40 to 80 per cent in other countries in western Europe.

Neff says there are various reasons for this: the high standard of rented units, the lack of tax incentives to buy and that the Swiss residential market is more highly regulated than most.

But Neff says it’s a trend that is changing. "About fifty per cent of flats coming onto the market now are being bought," he says, "You have a much greater opportunity now of finding a flat you can afford."

by Michael Hollingdale

×