Study Reveals Ongoing Decline in Switzerland’s Housing Prices

A recent study conducted by Wüest Partner has unveiled a continued decrease in house prices in Switzerland, with a drop of approximately 2% observed during the second quarter of 2023. Experts have highlighted that while the costs of single-family homes have decreased and the housing market has exhibited slight signs of relaxation, prospective property buyers are still encountering significant challenges.

Persistent Downtrend in Swiss Property Prices

According to the study, following their peak in 2022, property prices in Switzerland have continued to decline since the final quarter of the previous year. Donato Scognamiglio, CEO of the Iazi real estate consultancy, expressed to SonntagsZeitung that “the era of record prices for single-family homes has concluded.”

The latest data indicates that the price of single-family homes in central Switzerland decreased by over 2% in the second quarter of 2023, following a slight dip of approximately 0.2% in the first quarter. While this hasn’t offset the 5.5% average price increase observed in 2022, as reported by Wüest Partner, it does signify a shifting sentiment among those in the market to buy and sell properties.

Homeowners Begin to Worry as Housing Prices Fall

This trend has been less pronounced in areas characterized by low housing supply and high demand, such as Zurich, Basel, Winterthur, and Geneva, where single-family home prices have dropped by 2% or less. Robert Weinert of Wüest Partner, speaking to Blick, noted that rural regions with lower incomes and less accessible infrastructure and services have seen the steepest price declines.

The declining house prices have raised concerns among individuals looking to sell their properties. Donato Scognamiglio mentioned to SonntagsZeitung that he now receives regular inquiries from people worried about selling their homes for less than their purchase price. “Those motivated to sell may need to consider reducing their asking prices by 5% or more,” he added.

Affordability Remains a Challenge in Swiss Housing Market

The drop in housing prices has been attributed to the recent increases in Swiss mortgage interest rates, which reached 1.75% in June 2023. Unfortunately for potential homebuyers, this translates to lower housing prices primarily because fewer people can afford them due to elevated mortgage costs.

SonntagsZeitung also reported a significant drop in demand for housing, with some real estate agents witnessing declines of 20% to 30% over the past few months. Shifting interest rates have also prompted housing associations, pension funds, and financial institutions to divert their investments away from residential properties, opting for alternative assets to avoid exposure to a potential housing bubble.