- Owner-occupied apartment prices were up by only 1.63% (2.98% inflation-adjusted) in 2015, far from the average growth of 5.4% from 2009 to 2012, according to theSwiss National Bank (SNB).
- Single-family home prices increased by 2.29% (3.65% inflation-adjusted) in 2015, after rises of 0.42% in 2014, 4.6% in 2013, 3.6% in 2012, 3.8% in 2011, and 4.2% in 2010.
Rental apartments' average prices rose a meagre 0.04% (1.37% inflation-adjusted), according to the SNB:
- Old rental apartments gained 0.54% (1.87% inflation-adjusted) during 2015
- New rental apartment prices dropped by 2.69% (-1.4% inflation-adjusted).
The property market's slowdown can be attributed to efforts by the federal government and the Swiss National Bank to cool the market, using stricter lending criteria to lower housing debt (currently 90% of all household debt). The recent decision of the central bank to abandon its cap against the euro also made Swiss real estate more expensive for foreign investors, thereby reducing demand, according to Wueest & Partner AG, a real estate consulting firm.
- Northwestern Switzerland recorded the biggest price gain in owner-occupied apartments, at 4.92% (6.07% inflation-adjusted)
- Eastern Switzerland had a house price increase of 3.1% (4.23% inflation-adjusted)
- Central Switzerland had a house price increase of 2.94% (4.07% inflation-adjusted)
- Western Switzerland had a house price increase of 1.43% (2.55% inflation-adjusted)
- Southern Switzerland recorded an annual house price increase of just 0.72% (1.82% inflation-adjusted)
In 2015, the Zurich area saw annual house price rises of 3.43% (4.56% inflation-adjusted) while Berne area house prices rose 3.95% (5.09% inflation-adjusted). In contrast, prices in the Lake Geneva area fell by 3.13% (-2.07% inflation-adjusted).
Swiss property prices are expected to hold steady in 2016, according local property experts. The economy is expected to grow by 1.3% this year, after the central bank gave up its cap on the Swiss franc last year. The economy expanded by just 1% in 2015, after growing by 1.9% in 2014, 1.8% in 2013, 1.1% in 2012, 1.9% in 2011 and 2.9% in 2010, according to the International Monetary Fund (IMF).
Analysis of Switzerland Residential Property Market »
Luxury apartments in Geneva command average square metre (sq. m.) prices between EUR 11,400 to EUR 13,500.
In our sample, a 120 sq. m. apartment in Geneva costs on average EUR 11,460 per sq. m.. A 120 sq. m. apartment can be rented for around EUR 3,827 per month. That means a yield of around 3.33%
In Zurich, the average price per sq. m. for a 120 sq. m. apartment is around EUR 12,050. A 120 sq. m. apartment can be rented for around EUR 3,950 per month. That means a rental yield of around 3.27%.
Round trip transaction costs are moderate on residential property in Switzerland. See our Swiss residential property transaction costs analysis and Transaction costs in Switzerland compared to other countries
Capital Gains: Capital gains are tax-free at the federal level (unless the gains are from the sale of business property). All cantons, however, levy their own taxes on gains from the disposal of immovable property located in the canton.
Inheritance: Inheritance tax is levied at the cantonal level, on the net assets transferred to the beneficiaries.
Residents: Residents are liable to pay federal, cantonal and municipal income taxes on their worldwide income.
The buyer pays the Real Estate Transfer Tax which ranges from 0.2% to 3.3%, depending upon the canton. Since January 2005, Transfer Tax has been abolished in Zurich.
Rents: he initial rent can be freely agreed between the landlord and tenant. However, within 30 days the tenant can appeal against the rent as abusive.
Tenant Security: Tenancies tend to revert to indefinite duration tenancies. This is not necessarily a disaster for the landlord, because three months termination notice can be given by either side.
But the court may give the tenant an extension of up to four years, in cases where and eviction would cause hardship.
The economy was estimated to have expanded by just 1% in 2015, after growing by 1.9% in 2014, 1.8% in 2013, 1.1% in 2012, 1.9% in 2011 and 2.9% in 2010, according to the IMF. The Swiss economy has suffered last year mainly due to the franc, which is considered as “significantly overvalued”, despite record low interest rates. Economic growth is projected at about 1.3% this year.
Economic growth was relatively strong from 2004 to 2007, with average annual GDP growth of 3.5%. However with the global financial crisis, economic growth slowed to 2.2% in 2008. By the 4th quarter of 2008 Switzerland was in recession. GDP contracted by as much as 2.1% in 2009, before returning to positive growth in 2010.
In 2015, the overall unemployment rate stood at about 3.4%, up from 3.2% both in 2013 and 2014, according to the IMF. The country’s jobless rate is expected to rise slightly to 3.6% this year before returning to 3.4% in 2017.
Consumer prices are still falling in Switzerland. In January 2016, core deflation stood at 0.89% down from annual inflation of 0.37% in the same period last year, according to the Swiss Federal Statistical Office. Consumer prices fell by an average of 0.5% from 2012 to 2015.
Exchange rate cap abolished
On January 15, 2015 the Swiss franc soared against major currencies when the SNB removed its CHF1.20 = EUR 1 exchange rate cap. Immediately the Swiss franc gained 39% against the euro and almost 30% against the US dollar.
The cap was introduced in 2011, when investors fled the crisis-torn Euro for Swiss assets. Switzerland's exporters cried foul when the Swiss franc rose past the US$1.10 mark in March 2011. It went to US$1.20 in June 2011 during the Greek sovereign-debt crisis. It surged to US$1.30 in August 2011.
The exchange rate cap stopped the appreciation of the domestic currency against major currencies.
However recently the SNB decided to abandon the cap in face of monetary easing by the European Central Bank (ECB), believing that increased demand for safe haven currencies such as the Swiss franc would make it impossible to defend the cap.
In January 2016, the average monthly exchange rate stood at CHF1.0932 = EUR 1 and CHF1.0054 = USD 1, according to the Swiss National Bank.