Swiss house prices will increase at the slowest pace in 15 years in 2015 as smaller gains in rural areas combine with further declines in the two biggest cities, according to Wueest & Partner AG.
Prices will climb 0.5 percent this year, down from 0.8 percent in 2014, the real estate consulting firm wrote in report on Tuesday. Prices in Geneva are projected to fall 3.5 percent, while Zurich will see a 0.3 percent decline, Wueest said.
Last year’s slowdown in the Swiss real estate market came after more than a decade of annual price increases of 3 percent to 5 percent. The Swiss central bank’s January decision to abandon its cap with the euro, which threatened to weaken demand from foreign buyers, has had less impact than expected, Wueest’s Herve Froidevaux said.
“The impact isn’t so great,” Froidevaux said in an interview from Geneva on Tuesday. “Low interest rates are boosting the appeal of Swiss real estate for investors. On the other hand, we expect lower growth in employment in the mid-term, with some impact -- not huge -- on the demand.”
The central bank abandoned its 1.20 francs per euro cap on Jan. 15 and put a 0.75 percent charge on sight deposits after the prospect of quantitative easing in the neighboring euro region demanded ever-larger interventions. The franc soared in response, clouding the outlook for the Swiss economy.
The decline in house prices in Geneva and the surrounding region may prove short-lived, said Froidevaux.
“For single family houses, there hasn’t been a lot of construction, so the drop is likely to prove temporary,” he said. “There may be a similar picture for neighboring areas like Nyon, Gland and Morges.”
The average house price in the Lake Geneva region was 1.44 million francs ($1.5 million) in the fourth quarter of 2014, while in Zurich it was 1.16 million, Wueest data show.
The price of apartments in Geneva may fall for the next few years as bigger, state-controlled developments in the canton threaten to depress the wider market, Froidevaux said.