UBS Predicts Real Estate Price Drop in Switzerland

UBS expects a real estate price drop in Switzerland, as the country's appeal to the super rich faces a slowdown in the market.

Switzerland's luxury real estate market is facing a potential slowdown in the coming year, according to a recent study by UBS. The study, titled "Luxury Property Focus 2024," highlights several key factors contributing to this expected decline in prices.

One of the main reasons for the anticipated slowdown is the falling international demand for luxury real estate in Switzerland. The strong Swiss franc has also made investing in luxury properties in Switzerland even more expensive for foreign buyers, further dampening demand in the market.

Additionally, the average wealth of Swiss households without real estate has stagnated in the last two years, indicating a potential decrease in purchasing power for luxury properties. The overall economy in Switzerland is also performing below trend, which may not be very supportive of demand for high-priced real estate.

While the broader real estate market is expected to remain stable or even rise due to tightening supply shortages, UBS predicts a decline in prices for luxury properties this year. The luxury segment has already seen a peak in price growth in 2022, with prices rising by almost 10 percent. Last year, prices for luxury homes increased by just over 2 percent, significantly lower than the previous year.

Despite some more affordable locations catching up in terms of price growth, the ranking of the most expensive places remains unchanged. St. Moritz, Gstaad, Cologny, Verbier, Geneva, Zurich, and Ticino continue to dominate the luxury real estate market in Switzerland.

Zug and Andermatt are exceptions to this trend, with prices in these communities increasing significantly over the past decade. The low-tax strategy in Zug has attracted individuals with high incomes and assets, making it an attractive location for luxury real estate. Andermatt has also seen a rise in high-priced properties, positioning the municipality as a luxury destination.

Overall, the luxury real estate market in Switzerland is expected to experience a slight decline in prices this year, with fewer interested buyers and increasing price skepticism. Sellers may need to adjust their prices to attract buyers in a market that is becoming more challenging.

The luxury real estate market in Switzerland is facing headwinds due to falling international demand, stagnating household wealth, and a weaker economy. While some locations have seen significant price growth, overall prices are expected to decline slightly in the luxury segment this year.