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Scognamiglio estimates that current valuations are the result of an overreaction by the market. He expects a swing back.

The experts at Iazi were taken by surprise. «We have warned about a correction for years and expected it to come about on the back of a sudden rate increase in 2021,» said the company's boss. «It obviously comes as a big surprise that a certain correction might happen because rental income is about to take a dip.»

The experts also expect commercial property to remain in the focus, because rental income is bound to be squeezed due to the collapse of businesses. Residential properties and villas in the middle and lower end of the market however are not likely to drop, Scognamiglio said. «With the government vouching for loans, it should be plainly obvious that a property crash isn't a must. Switzerland has the time and the means to avoid it.»

Resistant to Crises

Stefan Heitmann, CEO of mortgage broker Moneypark, also knows pretty well how the sentiment is in the property business. He expects a dip in prices, with buildings for business and investment properties both more exposed than other segments of the industry. Self-occupied residential properties tend to keep up well during crises, said Heitmann.

The Moneypark platform is second only behind the Raiffeisen banks in brokering new mortgages. The brokers have seen first delays for new mortgages and even some cancellations, Heitmann said.

Safe Haven Effect Remains

The reasons behind cancellations are not just concern about the virus, but also expectations from credit-takers about a possible further fall in the price of a mortgage. Banks and insurers have also shown more caution recently. Heitmann believes that the latter effect has more to do with a delay in the digitization of the mortgage business and because applications for mortgages aren't that easily handled from the home office.

Which, once again, shows that clients are far more digital than the banks they work with, said the CEO of Moneypark.

Institutional providers of mortgages, which emerged more recently as players in the industry, displayed a mixed reaction to the pandemic. Some have put the business with mortgages on hold, while others see such investments as a safe haven and hence are boosting their efforts to sign up new clients.