Swiss residential real estate prices continued to rise in August, while in some regions rents fell, lending a greater sense of urgency to the warnings about an overheating market from the central bank.
Over 790,0000 Francs
The growth in demand caused the price of a square meter of living space to rise 1.8 percent from July to 7,916 francs ($8,638) at the end of August. This means an average, advertised price of a good 790,000 francs for a typical 100-square-meter apartment, the monthly Swiss Real Estate Offer Index shows.
By contrast, house prices, which had increased significantly in the past few months, stagnated at a high level.
«House prices are at dizzying heights,» the report said. With prices per square meter of 7,048 francs and an average living space of 160 square meters, the average house price is over 1.1 million francs.
No Sign of Turnaround
Head of operations at Scout24 Martin Waeber does not expect a turnaround in the real estate market for the time being as supply will probably remain scarce. «The more the prices rise, the longer vendors wait to sell their properties.»
Only a sharp increase in new building or a drop in demand, for example due to rising mortgage interest rates, might reduce the upward pressure on the price of home ownership. «I foresee neither at the moment,» Waeber said.
On the rental market, lower prices in northwest, east and central Switzerland have pulled the monthly average down by 0.5 percent. All other regions recorded slight increases in rents.
SNB Sounds Alarm
On Tuesday member of the board of the Swiss National Bank Fritz Zurbrügg warned in unusually stark terms of the vulnerability of the mortgage and real estate market to a price correction and loan defaults. The SNB estimates that the residential property market is currently between 20 and 30 percent overvalued.
The domestic real estate market should continue to provide the SNB with strong arguments to reinstate counter-cyclical capital buffers at banks, which were suspended at the beginning of the coronavirus pandemic in spring 2020. The banking sector is resisting this.
