| Ramzi Chamat
The Swiss residential real estate market showed impressive resilience in the second quarter of 2023, demonstrating little impact of interest rate changes on transaction prices. This trend is a clear indication of the strength and stability of the Swiss real estate market, despite economic fluctuations.
Despite volatile interest rates, prices of single-family homes climbed by 1.3% in the second quarter of 2023. At the same time, condominiums recorded a similar price increase of 1.2% on the previous quarter. These price rises reflect strong demand and a healthy market, where changes in interest rates appear to have little impact on purchasing decisions.
In some regions of Switzerland, price rises have been particularly notable. Single-family homes in Central and Eastern Switzerland saw the biggest price rises over a one-year period. Similarly, condominiums have seen their biggest price rises in Central and Southern Switzerland over the last four quarters.
Fredy Hasenmaile, Chief Economist at Raiffeisen Switzerland, explains this phenomenon: "Despite limited supply and higher financing costs due to changing interest rates, it is the shortage of supply that is currently dominating the market." This situation highlights the strong demand for residential real estate in Switzerland and the market's ability to absorb higher interest rates.
Compared to the previous year, Central Switzerland (+18.8%) and Eastern Switzerland (+9.8%) recorded the highest price increases for single-family homes. This trend demonstrates the dynamism of the real estate market in these regions. However, the regions of Bern (+3.4%) and Northwestern Switzerland (+3.3%) experienced more modest growth.
An analysis of price trends by type of municipality revealed some interesting trends. Houses in urban areas recorded a higher increase (+7.3%) than in other municipalities. Condominiums saw the biggest price rise in tourist resorts (+7.9%), while the smallest increase (+4.1%) was observed in city centers.
These trends indicate that Swiss tourist areas are becoming increasingly popular for buying condominiums. These locations offer attractive prospects for real estate investors, not least because of their tourist potential. At the same time, growing demand in urban areas suggests a growing interest in city living.
In conclusion, the Swiss real estate market continues to demonstrate its robustness and resilience in the face of fluctuating interest rates. Demand remains strong, particularly for single-family homes and condominiums, which is reflected in steadily rising prices. Investors, buyers and sellers in the Swiss real estate market can look forward to positive market dynamics in the future, despite interest rate fluctuations.
