Urbanites are already tucked into new chalets bought during the pandemic, even if the ski slopes aren't yet quite open. Local banks aren't all that pleased about booming prices.

COVID-19 seems to have helped the Swiss rejuvenate their relationship with the mountains. Alpine tourism boomed in 2020, particularly when travel abroad was severely restricted.

And anyone who could simply went and bought themselves an apartment or a chalet – sometimes on the spot.

It was not only about having a vacation place. The new flexibility as a result of the increase in remote work worldwide during the height of the pandemic also helped. «Work where others go on vacation» has been a popular slogan since then.

Restrictions on Second Homes

A number of alpine regions have benefited even though there are restrictions on second homes, with the dried up urban and suburban real estate markets in the flatlands where prices have grown exponentially also not helping.

«We have seen an above average number of leisure real estate units changing hands in the past few years», the cantonal bank of the Grisons observed when asked. But they are probably not all that happy as the growth in mortgages on their books as been below average.

They believe the reason is mainly attributable to the fact that clients rely on their house bank when financing second homes.

Price Index at All-time High

Flatlanders seem to be using their local banks. The Frutigen Savings and Loan in the Bernese Oberland, an institution dating back to 1837, say the same, even though they are clearly pleased by the buoyant market. «The demand for primary and second homes has risen in the past two years significantly», reports Marco Loosli, that bank's head of credit. In the Kandertal valley, for example, prices are up 5 percent on average.

But with that there is a big but: «What we can see is that the local house banks where the buyers are based seem to be more prepared to finance units in our locality.»

Competition is even tougher for banks in the flatlands, pressuring margins, and one way they can grow business is to increase mortgage volumes. The Raiffeisen price index for single family homes, for example, is currently a record high as home prices increased a further 4.4 percent in the third quarter.

Dry Mountain Air

The situation is not all that different in the alps, with market liquidity drying up in many of the more renowned alpine hotspots such as Davos and Oberengadin, the Bernese Oberland and the Valais. That raises the specter of exaggerated price gains, which exposes the banks in the flatlands much more than alpine-based institutes with their local expertise.

Some local banks are even managing to defend their territory. The cantonal bank of the Valais, for example, recorded an increase in mortgage applications between April 2020 and September 2021, with growth of 7 percent recorded in key tourism destinations alone. 

Foreigners Using Local Banks

The picture is not the same everywhere. In Saanenland, a part of the Bernese Oberland home to Gstaad, the constantly alternating roster of the super-rich typically use a local bank to finance their purchases. Juerg von Allmen, the head of SB Saanen Bank, says that Swiss citizens buying property do sometimes use their local banks if they are not from the area but that foreigners tend to trust local banks. 

«It is hard to be in the market here without local expertise – as seven figure sums are often in play», von Allmen added.