Swiss Property Prices to Slow on Lower Immigration, ZKB SaysBeatrice Faessler
Swiss immigration is expected to slow, taking pressure off the country’s booming property market, according to Zuercher Kantonalbank.
Reduced immigration will probably cut the rise in Zurich apartment prices to 3.5 percent this year and 3 percent in 2014 from 7.2 percent in 2012, the bank said in a report today. Luxury properties may be particularly affected because of a decline in skilled immigrants from Germany and other central European countries. Prices for such properties may be reaching a turning point, ZKB said.
“Due to lower immigration in the coming years, we expect more moderate price increases in the Swiss property market,” ZKB Chief Economist Anastassios Frangulidis said in the report.
Immigration and cheap credit have bolstered demand for housing. With the central bank easing monetary policy to take pressure off the franc, Switzerland is experiencing the biggest surge in real-estate prices in 20 years.
A net inflow of 103,000 people reached a historic peak in 2008 after years of strong economic growth and an agreement removing immigration obstacles between Switzerland and the European Union that took effect in 2002. The limit on residence permits for EU citizens that Switzerland imposed in April is one of the factors limiting further growth in immigration. Net immigration in 2011 fell more than 40 percent compared with 2008, according to the report.
While less employment will be available in construction and the public sector and the financial industry will be cutting staff, industrial and tourism jobs should grow in the coming five years.
That means future immigrants will need to have different professional skills and education, ZKB said. Industry and tourism probably will attract immigration from countries with high unemployment rates, including Spain, Italy, Portugal and Greece.
Increasing numbers of Swiss citizens with good academic training might be closing a shortfall in highly qualified workers and help offset a decline of about 30 percent in net German immigration between 2008 and 2011, according to the report.