Will rising interest rates in Switzerland really bring down real estate prices?

Buyers in Switzerland have seen an increase in interest rates on mortgage offers for the purchase of real estate. This increase in rates should have brought down real estate prices, but it did not. Let us try to understand why.

Increasing demand for real estate in Switzerland as well as in Ticino

The Swiss and Ticino real estate sector is currently experiencing great demand for real estate, both from foreigners and from the Swiss themselves. This climate of uncertainty due to the geopolitical situation that is affecting the whole world, has prompted savers to invest their money in a stable market and in an ever-expanding sector. In fact, the Swiss real estate market has always been very attractive and profitable; and especially so now. There are many real estate agencies on our territory, as well as in the rest of Switzerland, that receive enquiries from foreigners for the purchase of real estate every day. It is as if to say that those who can afford to choose where to live in this uncertain historical period, choose to move to a neutral country and, above all, one with a stable government, such as Switzerland. The post-pandemic period has also played its part, completely changing people’s needs. Today, requests for single dwellings with a garden are the most popular, both from residents and from those coming to our country for the reasons listed above and especially because outside the Swiss borders the political climate conveys little security.

Population increase and decrease in new buildings

The political choices made by the Swiss have made Switzerland a wealthy country today. Our labour market, thanks in part to the imposition of minimum wages, is healthy and allows families to look to the future with optimism; and why not, even to start a family more than only a decade ago. Many of the people who fled their country because of the war will remain in Switzerland. But as we know, ours is a small territory and the building areas that remain are not many.

New construction: yes, but when?

Even if there were still plenty of building land in our little Switzerland, let’s not forget that the current geo-political situation, with sanctions and all the rest, is causing delays in material supplies, and even increasing them.

The energy crisis has also contributed to higher prices.

Prices on real estate in Switzerland are therefore not tending to fall, but rather to stabilise. In fact, for some new offers, we should not be surprised to see rising cost estimates made only six months ago!