“Falling supply quotas and rising transaction prices” Südostschweiz Wohnen from 30.12.2022

Since the implementation of the Second Homes Act, very little has been built and the stock of second homes or single-family houses is hardly growing. What is growing steadily, however, is the interest of buyers and the transaction price of residential property.

Date

9.1.2023

Author

gin001-s

On March 11, 2012, the Swiss electorate voted in favour of the second-home initiative, thus stopping the approval of new units in municipalities where the proportion of second homes is over 20 percent. New builds are now only permitted in a few exceptions. This has led to an extreme shortage of supply and a sharp rise in demand. Although this excess demand has eased somewhat in recent months due to the uncertainties on the stock markets, the geopolitical situation and the interest rate hikes, it is still high. Even if demand falls slightly, there is still a significant imbalance.

Desire for home ownership high

Vacation apartments and houses are popular. Demand, especially for vacation homes, remains very high. Forecasts predict that excess demand will remain high in the coming months, as the pandemic and its consequences have led to a sharp rise in interest and desire for home ownership. The system of supply and demand is a fundamental principle of the economy, which also applies here: if demand increases while supply remains the same or even decreases, prices will rise.

Steadily rising transaction prices

Compared to the previous year, transaction prices have continued to rise, with prices for condominiums in particular only going in one direction – upwards. Looking at the change in transaction prices for residential property in Lenzerheide, for example, prices have risen by 160% for condominiums and 130% for detached houses since 2000. In Falera and Sagogn, prices have even more than doubled since the turn of the millennium. Rising interest rates, inflationary trends and the current outlook for the real economy have only had a marginal impact on the constellation of the real estate market so far. However, this does not mean that the market is untouchable: additional uncertainties or major interest rate rises could certainly influence the market in the near future.

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