The Unassuming Economist

“House prices are high, but it’s too early to call it a bubble,” according to an IMF study on the Swiss Housing Market: What are the risks? It says that “real house prices are high, and at an all-time high for owner-occupied apartments. Prices have been on an increasing trend since the late 1990s and the average price for a single family home has increased by about 49 percent. Prices for owner occupied apartments have increased even more (72 percent) and in the last four years the annualized price increase (5 1/2 percent) substantially exceed nominal GDP growth. When deflating house prices by the CPI, owner-occupied apartment prices are slightly above the peak of the boom-bust period in the late 80s to early 90s. Single family home prices are still below the peak, but still high by historic standards. Residential house price increases are especially pronounced in certain segments and region. Turning to regional patterns, Geneva stands out with price increases far exceeding the other regions in both the single family home and the owner occupied segments. It is also important to note that the price increases started from already high price levels.” 

However, “current prices look less elevated when compared to income and rents. Following the
boom in the late 80s housing prices fell dramatically and their subsequent growth remained
subdued relative to growth in rents and in GDP per capita until the late 2000s, when housing price growth accelerated. While these ratios are still well below the levels reached at the peak of the previous boom, the ratio of price to rents for owner occupied apartments is already 15 percent above its long-term average.”