Pandemics should lead to a decline in real estate demand due to uncertainty about the future. However, this is not the case in Switzerland – in fact, there was a particularly high number of purchase transactions in one segment.
During the coronavirus pandemic practically everyone had to sit at home. However, many still looked around for new residential property. This led to prices for real estate in Switzerland to blithely continue to rise, as can be seen from the latest Swiss index for residential real estate (IMPI), which the Swiss Federal Statistical Office (FSO) published on Tuesday.
According to the report, the indicator rose by 2.7 percent in the second quarter of 2022 compared to the previous quarter and now stands at 113.2 points, taking the 4th quarter of 2019 as a basis. Compared with the same quarter last year, inflation was 7.5 percent.
Large agglomeration in focus
In the second quarter of 2022, both the prices of single-family houses (+2.0%, Einfamilienhäuser) and those of owner-occupied apartments (+3.3%, Eigentumswohnungen) rose across Switzerland compared with the previous quarter. And the strongest price increase took place in the category of urban municipalities in a large conurbation (+6.0%).
The FSO calculates the IMPI from an average of around 7,000 transactions originating from all regions of Switzerland. The authority obtains the data from the 25 largest mortgage institutions in Switzerland. They cover a very large market share, as the vast majority of real estate purchases are financed with a mortgage.
Boom in single-family homes
All this data allows the Authority to show the price changes since the beginning of 2019. And it is precisely this that impressively shows that the coronavirus pandemic did not affect the price trend of residential real estate. The price index increased to about 113 percent. Market prices for single-family homes rose in particular, as the chart impressively illustrates.
What can be learned from this? A pandemic – at least as far as Switzerland is concerned – is a period in which real estate is bought and prices continue to rise. Bargain hunters are obviously disappointed.