Real estate prices up in the second quarter

Both house and apartment prices rose in the second quarter, despite rising interest rates. A slowdown is expected in the medium term.

The prices paid on the market to buy a home increased by 0.7% from April to June, according to the SWX IAZI Private Real Estate index published Tuesday evening by Cifi. The change concerns villas (+0.6%) and condominium apartments (+0.8%). Demand for owned accommodation “remains strong despite higher interest rates,” the document sums up. Over the last twelve months, the increase in transaction prices (5.2%) remains above the long-term average.

“The main price factors such as immigration and economic activity are stable”, explained Donato Scognamiglio, managing director of Cifi, quoted in the document. While the cost of long-term fixed mortgages has increased, short-term money market mortgages (such as Saron) ‘are still being offered at very attractive terms’.

In investment properties, prices climbed 6.4% on an annual basis. “For the moment, the market remains impassive, but we identify increased risks for investment properties,” underlined Mr. Scognamiglio. Rising interest rates have a downward effect on the price when valuing these assets. ‘Following the Swiss National Bank’s decision on interest rates, real estate is no longer the only investment alternative,’ he added.

Anticipating a slowdown in the medium term, Cifi notes that ‘future developments will depend to a large extent on inflation and therefore on possible further interest rate hikes by central banks’.

In mid-June, the Swiss National Bank surprised by initiating a tightening of its monetary policy, in order to avoid an acceleration of inflation. The issuing institute has not ruled out further increases.

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