Wednesday, September 3, 2014
“Residential real estate prices have been on an upward trend since the late 1990s, and increases have been especially strong for owner occupied apartments. Through end-2013 prices for owner occupied apartments had increased by 77 percent in the last ten years, while prices for single family homes increased by 49 percent during the same period (…). Also in real terms have prices increased significantly. Compared to the CPI, owner occupied prices are at an all time high, almost 5 percent above the previous peak in the early 1990s before the sharp downward adjustment. Single family home prices are still about 14 percent below the peak, but above the peak in the 1970s and high in a historical perspective,” according to the IMF’s technical note on Switzerland.
More specifically, the note says that “Real estate price increases have been more dramatic in some regions. In particular at Lake Geneva, where prices for owner occupied apartments during the last ten years had increased by 152 percent through the third quarter of 2013 (…). Single family homes prices had increased by 91 percent during the same period. The price increases also started from already high levels.”
In terms of valuation measures, the note says that “Comparing residential real estate prices to rents and income shows substantially increased ratios. Compared to rents, prices of owner occupied apartments have increased by about 25 percent in the last 10 years, which is significant (…). The ratio is nevertheless well below the historical high, though above the historical average. For single family home, the price to rent ratio is just above the long-run average. Turning to real estate prices compared to GDP per capita, the picture is fairly similar, and the ratio for owner occupied apartments prices is around 10 percent above the long-run average, while single family homes are a little below.”
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