The real estate market shows the first reactions to the turnaround in interest rates

Prices fall, but not a crash

The real estate market shows the first reactions to the turnaround in interest rates

The Swiss real estate market is showing the first signs of a reaction to the turnaround in interest rates. Although this trend is not yet reflected in the data for the fourth quarter, current data probably suggests the first price corrections.

In a study on Thursday evening, real estate consulting firm Iazi wrote that there has been a decline in the willingness to pay for multi-family houses in recent weeks. This means that the zenith in this segment has probably been passed. To a lesser extent, this also applies to trading in condominiums.

In the case of single-family homes, however, demand remains robust, and one will probably have to dig deeper into their pockets again in the coming quarters to buy their own house.

“return to normal”

The market is currently reacting to the higher interest rates, explained Iazi: “In this respect, the expected price correction for apartment buildings does not correspond to a crash, but a return to normal,” writes Iazi boss Donato Scognamiglio.

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In the times of negative interest rates, almost any price was paid for the coveted investment properties. With the positive key interest rates, real estate would now have to assert itself against other investment opportunities, explained Iazi.

Price increases again in the final quarter

The SWX Iazi Private Real Estate Index showed an unimpressed upward trend for the fourth quarter and for residential property rose by 1.4 percent compared to the previous quarter. Single-family houses and condominiums contributed to this price increase to roughly the same extent. Across 2022 as a whole, home prices were 5.0 percent higher than in 2021.