Expats move into the Swiss housing market: Juliette and Tom moved to the Zurich-area with their two young children less than a year ago from the UK. They aren't sure how long they'll stay. In December, however, they moved into their newly bought flat.
Less than 20 kilometres away, another British family never even bothered to look for a rental home when they moved to Switzerland even more recently, but instead opted to jump into the buyers market.
Executive relocation company Anchor Relocation Services Relocation services or "employee relocation" includes a range of internal business processes that are engaged to transfer employees (and often their families) or entire departments of a business to a new work location. , in view of the growing demand of their clients to acquire property rather than just rent a home, have linked up with a local Zurich-area estate agent.
"We have seen a noticeable increase in interest to buy, as more and more companies are transferring their headquarters to Switzerland and foreigners are arriving with local contracts rather than only expatriate packages," Doris Hautle-Lotscher, partner with Anchor Relocation Services, told Swiss News.
Resident foreigners keen for a foothold in the local Swiss housing market are but one of the factors that has been driving up house prices, especially in areas around key cities.
"While one cannot say that foreign buyers have had an impact on prices at a national level, it is deemed that this interest has had a role in helping bolster prices in key locations like Zurich and Geneva Geneva, canton and city, Switzerland
Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. ," said Dieter Marmet, a partner with Wuest and Partners, a Swiss real estate consultancy.
One of the reasons that this new interest in the market is remarkable is that Switzerland has traditionally been a rental market, with rates of home ownership that remain, despite the recent up-surge, among the lowest in Europe and the world.
Have prices peaked?
On a national level, asking prices for condominiums have risen some 22 per cent between 2001 and 2006, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. data supplied by Wuest and Partners. Single-family home asking prices have risen 14.3 per cent over the same period (See Graph A--Data from Wuest and Partners).
An even sharper climb has been recorded in the affluent Geneva and Zurich areas.
Credit Suisse's Fredy Hasenmaile, Head of Real Estate Analysis, said the increase so far is a recovery from a crash in the housing market in the early 1990s.
"It wasn't until the end of the nineties that prices stabilised again, at a level that was roughly 20 per cent lower. Since then, however, prices have seen a robust recovery and in the condominium condominium
In modern property law, individual ownership of one dwelling unit within a multidwelling building. Unit owners have undivided ownership interest in the land and those portions of the building shared in common. sector they have reached their former peaks or even surpassed them," Hasenmaile told Swiss News.
"Price losses were above average in Zurich and in Geneva, and these sub-markets have seen above-average price growth in the last eight years as a consequence. In Zurich, prices rose by some 25 per cent, whereas in the Lake Geneva area, where supply has failed to keep pace with demand, the increase was roughly 45 per cent," he added.
This recovery in housing prices has been driven by a buoyant economy, higher incomes and lower borrowing costs. The final aspect of the price recovery has been linked to the previously mentioned increase in home ownership rates, which in turn have been partially boosted by the arrival of 'high income' foreigners who have a different mentality vis-a-vis homeownership than the more rent-oriented Swiss.
A bilateral agreement with the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the
European Community on the free movement of workers has meant increases in the proportion of immigrants from Northern and Western Europe Western Europe
The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). . Since a large part of these workers are highly skilled, and thereby also earn more, demand for home ownership by foreigners is increasing.
"This change [in immigration immigration, entrance of a person (an alien) into a new country for the purpose of establishing permanent residence. Motives for immigration, like those for migration generally, are often economic, although religious or political factors may be very important. ] has increased demand for residential property at desirable locations. Prices in such locations in particular have risen sharply in recent years and this additional demand is likely to translate into above-average upward pressure in the future as well," said Hasenmaile.
However, despite the recent price hikes and despite the fact that many balk balk
the action of a horse when it refuses to obey a command to which it usually responds. See also jibbing. at Swiss house prices, this Alpine market looks competitive at an international level.
Data provided by UBS UBS Union Bank of Switzerland
UBS United Bible Societies
UBS United Blood Services
UBS United Buying Service
UBS Used Bookstore
UBS University Business Services
UBS Universal Building Society (UK)
UBS Ulaanbaatar Broadcasting System showed that the real prices (which remove inflation) of condominiums in Switzerland have risen marginally, while single-family homes have actually decreased since 1984. In the UK, by contrast, residential real estate prices have more than doubled and in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. real housing prices have risen by more than 50 per cent (See Graph B--Data from Wuest and Partners).
"Valuation of the Swiss housing market is still moderate, with the exception of some hot spots hot spots
acute moist dermatitis. . There are hardly any signs of irrational price bubbles," said UBS' Christian Unternahrer, Head of Real Estate Research & Strategy.
As in other Western European countries, the Swiss state also provides some incentives to try to bolster home ownership, but it would be difficult to argue that these are significant in relative terms. Since 1995 employees have been able to withdraw assets from their company pension fund (to which enrolment is mandatory) to purchase residential property. Little else has been done to encourage home ownership.
"Apart from efforts to push a savings incentive programme for future homebuilders, for which solutions have yet to materialise, the promotion of home ownership is conspicuously absent in Switzerland's current political landscape," said Hasenmaile.
"Currently we don't see any major changes as regards any additional government incentives," confirmed UBS' Unternahrer.
Taxation also offers little to encourage home ownership. Housing is treated as an asset for both wealth and (imputed Attributed vicariously.
In the legal sense, the term imputed is used to describe an action, fact, or quality, the knowledge of which is charged to an individual based upon the actions of another for whom the individual is responsible rather than on the individual's ) income tax--based on a theoretical rental income Noun 1. rental income - income received from rental properties
income - the financial gain (earned or unearned) accruing over a given period of time . A revision of federal taxation law, which foresaw the elimination of imputed rent Imputed rent is the economic theory of imputation applied to real estate.
In owner-occupancy, the landlord-tenant relationship is short-circuited. Consider two people, A and B, each of whom owns property. and housing value taxation, was rejected in 2004.
Furthermore, Switzerland's traditionally conservative banks rarely allow mortgages to surpass 80 per cent of the value of the house--a noticeable difference from Italy and the UK's 100 per cent mortgages. Swiss lenders also typically expect 15 per cent of the house value to be paid back within 15-20 years.
House prices on the horizon
But what is the overall price outlook? Is it too late to jump on the housing bandwagon?
In the short-term, international banking giants UBS and Credit Suisse The Credit Suisse Group (SWX:CSGN, NYSE: CS) is a financial services company, headquartered in Zürich, Switzerland. It is the second-largest Swiss bank, behind UBS AG. see the rate of price increases slowing this year, if not flattening on a national level.
"The period of rising house prices is coming to an end ... We believe that there is less scope for price increases and expect prices in the condominium segment to move sideways this year. In the single family homes sector, where there is less supply pressure, we do expect prices to keep rising in 2007, though at a more moderate pace of 1.5 per cent," Credit Suisse said in a recent report.
They added however that on a regional basis the outlook could be different, with prices rising above average rates in some cantons, including Geneva and Vaud.
"In the short term, prices in the Zurich area are likely to lose their upward momentum or even stagnate stag·nate
intr.v. stag·nat·ed, stag·nat·ing, stag·nates
To be or become stagnant.
[Latin st in response to the high volume of construction activity, whereas in the Lake Geneva area, continued price growth can be expected," added Hasenmaile.
On a national level UBS is instead slightly more optimistic. In its Real Estate Report published earlier this year, UBS said prices for both condominiums and single-family homes will probably continue to rise this year, thanks to strong economic growth, population movement, and more foreign investors.
In the long-term, both banks forecast a positive outlook, especially because they argue that unlike other real estate markets, Switzerland has not experienced a price bubble and can continue to grow solidly.
"UBS Wealth Management Research estimates stable or slightly increasing prices in the long run, depending on the region," said Unternahrer.
He added that the driving forces behind the optimistic outlook are mostly a good balance between supply and demand (with a national vacancy rate at a low 1.1 per cent), a growing demand thanks to ageing baby boomers--the youngest of whom are now passing age 45, the most active age in real estate--a continuous growth of household incomes, and demand from abroad (both foreigners buying holiday homes and Swiss expatriates buying a foothold in the homeland).
Credit Suisse's Hasenmaile confirmed that "solid potential" was forecast for Switzerland's real estate market in the long-term. He said limited land resources Noun 1. land resources - natural resources in the form of arable land
natural resource, natural resources - resources (actual and potential) supplied by nature and the "attractiveness of Switzerland as a working place for employees coming from EU or EFTA EFTA: see European Free Trade Association. countries" would further help prices gain momentum.
He added that the Zurich area was the most appealing in the long run because it is "where the market appears to be even more willing to accommodate upward price movements".
Therefore, it could be argued that if you are in it for the long haul Long distance. Long haul implies traversing a state or a country. Contrast with short haul. there may still be reason to hop on Verb 1. hop on - get up on the back of; "mount a horse"
bestride, climb on, jump on, mount up, get on, mount
move - move so as to change position, perform a nontranslational motion; "He moved his hand slightly to the right" Switzerland's real estate bandwagon--even though the ride is more likely to boast reliability than fireworks fireworks: see pyrotechnics.
Explosives or combustibles used for display. Of ancient Chinese origin, fireworks evidently developed out of military rockets and explosive missiles and accompanied the spread of military explosives westward to .