Research article

Location by Location: Switzerland

Price growth is slowing as the government introduce stricter lending requirements.

Switzerland experienced sustained levels of residential price growth between 2008 and 2013 (the price of houses grew by 28%), running counter to many other European markets. Economic expansion, low interest rates, growth in real wages and immigration of wealthy individuals all supported housing demand. The strengthening Swiss franc also raised their price in comparison to other currencies.

Price growth is now slowing, amid government efforts to cool the market by introducing stricter lending requirements. The decoupling of the Swiss franc with the euro has seen its value appreciate and make Swiss exports more expensive, slowing the economy in general. Foreign buyers with Swiss franc denominated mortgages have been especially hit.

Switzerland has one of the world’s strictest citizenship systems. Qualification requires 12 years of permanent, legal and notated residency, fluency in one of the official languages and integration into Swiss culture and community. Switzerland introduced new quotas for EU citizens in 2013. Foreign buyers are also heavily restricted on residential property purchase – just 1,500 permits are released a year – although the rules vary significantly by Canton.

Figure 26

FIGURE 26Switzerland market performance (2006 – 2015)



Geneva is very much a rental city (some 80% of the population is estimated to rent) and the rental market is strongly pro-tenant. Geneva is an expensive city in which to live and there is especially strong demand for city-centre apartments – which are in short supply.

Demand is fuelled in part by employees of the finance and business services sector on generous relocation packages.

Property prices in Geneva have grown 55% since 2006, compared to 27% across Switzerland. These rates of growth are echoed in the rental market. High prices have put property purchase and even rent out of reach of many locals in Geneva, which counts itself alongside Zurich and Zug as one of the most expensive locations in the country. Each day 90,000 workers commute from neighbouring France to the city, a number that has doubled over the last decade.

For those who can afford it (and, non-nationals who can obtain a permit to purchase), Geneva offers attractive property in a safe, secure environment. The most desirable property enjoys lake or mountain views.

Geneva is an expensive city is which to live

Swiss Alps

The Alps are the world’s largest ski market, and attract second-home buyers from across the globe. The Swiss Alpine resorts of Gstaad, St Moritz, Zermatt and Verbier are among the world’s most exclusive, and expensive, with ultra-prime prices ranging from €20,000 to €30,000 per sqm ($1,650 to $2,500 per sqft).

These resorts have diversified beyond skiing to cater to many of the other demands of the super-rich. Designer shopping, Michelin starred restaurants and polo are all part of the offer.

These ultra-prime resorts proved relatively resilient during the global economic crisis. Transaction levels slowed, but values were supported by restricted supply and the absence of forced sales.

In the prime markets, holiday home buying peaked in the 2007-08 season, and fell away significantly during the recessionary years. Discretionary second-home buyers, reliant on mortgage finance withdrew from the market after the credit crunch. Following a period of stabilisation, prices are now on the rise again although buyers continue to expect a discount, particularly for second hand properties.

Analysis of sales data suggests more sales are now taking place at lower price points. The resilience of the ultra-prime markets has started to ripple down the market ladder. The average purchase price of prime property transacted across core Alpine resorts was €1.5m in 2011, when only the very best properties were transacting. By 2014, this had fallen to just under €1m, with British buyers, in particular, purchasing again at lower levels.

The markets are also seeing an expansion in the breadth of buyers they attract. Prior to the global recession, British buyers dominated the market, accounting for the vast majority of foreign buyers in many Swiss resorts. Today, a much wider variety of buyers are present. These include a wide range of European buyers, particularly those from northern Europe and the Nordics, as well as those from further afield.

The premier Swiss ski resorts have been among the first to attract Chinese skiers outside of their homeland. Chinese skiers numbered just 10,000 in 1996, and now exceed five million. Switzerland is now second only to Japan as a recipient of these high-spending ski tourists. The Chinese have yet to make Alpine home purchases in any volume, but other Asian buyers are increasingly active in Switzerland, notably those from Malaysia, Singapore and Hong Kong.

The Swiss Alps attract second-home buyers from across the globe

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