Residential property prices have soared over the past five years in Zurich and, to a lesser extent, in Geneva, making home ownership “a luxury good,” according to a UBS study published Tuesday.
Buying a home for own use in Zurich costs almost 25% more in real terms than five years ago, the highest increase of all the European cities reviewed by the three-key bank. Over the last four quarters, the Swiss economic capital has also recorded one of the highest increases in rents (+25%) of all the cities evaluated in the study.
“Due to the limited availability of properties, home ownership in Zurich is increasingly seen as a luxury good,” noted economists at Switzerland’s leading bank. They estimate that only 15% of the population is able to afford to buy real estate.
In Geneva, housing prices have jumped by 10% over five years, “but they have stabilised over the last four quarters”, the experts pointed out. On the shores of Lake Geneva, “rents have increased more sharply than incomes over the last four quarters”, they noted.
Higher risks in Zurich than in Geneva
“In the coming years, price increases will be less significant in Zurich than in Geneva,” UBS economist Thomas Veraguth stressed at a press conference.
“It is difficult to see opportunities for improving access to property” and currently we are heading towards a deterioration of the situation, stressed the specialist. For a change to take place, “Switzerland would have to completely review its management of the territory”, added Mr. Veraguth.
In a context of shortage in housing construction, the next expected reduction in the key rate by the Swiss National Bank (SNB), which meets on Thursday, will certainly boost the construction sector, but with a delayed effect of one to two years, the expert added. In the immediate term, the lack of supply is supporting prices.
In an international comparison, Zurich ranks third in terms of risk of a real estate bubble, behind Tokyo (price increase of 30% over five years) and Miami (+50%). Geneva is in sixth position in the global real estate bubble index compiled by UBS, behind Toronto (slight decline) and Los Angeles (stable).
This article was published automatically. Sources: ats / awp
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