House prices in Switzerland have
bucked the global trend. The single-family
homes index rose 5.3% during the year to January 2009
(4.5% in real terms),
while the owner-occupied apartment index increased 5.6%
(4.8% in real terms) over the same period. Overview Gstaad properties
The old rental apartments index also rose 4.3% (3.5%
in real terms) to January 2009 from a year earlier. Only
the new rental apartment index dropped, down 3.6% (-4.3%
in real terms) compared to a year earlier.
 Since Swiss house price increases have been much more
modest in recent years than in boom countries like the
UK, US, Ireland or the Baltics, it is not surprising
that Swiss house prices haven’t fallen - but increases
of 4% to 5% are a bit astounding.
There are several possible explanations:
1.households took advantage of lower interest rates
in effect since Q4 2008;
2.the increase in the number of non-resident foreigners
led to higher demand for houses; and
3.after the collapse of house prices in other countries,
Swiss citizens and residents moved their investments
back to the domestic housing market, which is relatively
more stable.
Analysts ask whether Swiss house price rises can continue
during 2009. The necessary conditions would be that
the recession should be offset by low inflation (=
higher purchasing power), that there should be low
interest rates, and continued (albeit weakening) net
migration.
By 2010 each canton will have the responsibility for
its own foreign property acquisition laws. This may result
in faster transfer of property titles, as opposed to
the current delays.
 The 1990s - a crashing decade
Swiss apartment prices boomed during the late 1980s and
early 1990s, with rental apartment prices rising on average
by 14% annually from 1988 to 1991.
Other properties’ prices rose strongly too. Single-family
homes rose on average 13.87% a year from 1988 to 1989,
and owner-occupied flats by 10.4%.
To tame what it saw as runaway house price inflation,
the Swiss National Bank (SNB) aggressively raised interest
rates. Mortgage rates rose to 7.9% in October 1992, up
from 4.9% in January 1989. Since most Swiss mortgages
then were variable rate (about 76% of all loans in 1994),
the impact was severe.
Apartment prices fell by 9% in 1993, followed by another
9% in 1994, and 8.3% in 1996. From 1993 to 2000, apartment
prices fell by an average of 6% yearly. The average price
of single-family homes fell by an average of 2.57% annually
from 1990 to 1999, while the price of owner-occupied
flats fell 2.72% annually from 1991 to 1998.
Stagnating real incomes, slow population growth, weak
net migration and increased housing supply led to further
house price falls. By 2000, apartment prices were back
to their 1987 level. The crash had wiped out a decade’s
gains.
...more
here: globalpropertyguide.com
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