Swiss rental market seeing impact of economic slowdown
Tight market for homes keeping prices up
Trendy city centre areas, such as that around the new Prime Tower in Zurich, are able to demand top prices for housing (photo, Prime Tower)
GENEVA / ZURICH, SWITZERLAND – New apartment leases in urban Switzerland have risen 10 percent a year in the past five years but this could be coming to an end, according to property consultants Wuest & Partner in their most recent quarterly assessment of the Swiss real estate market, but not before a new increase this year. Home prices remain high, with no sign of the very tight market easing, according to “Property market Switzerland 2012/1″.
The report notes that typical transaction prices for standard single-family houses today range from CHF500-700,000 in non-urban areas and CHF1.5 million to CHF2.5 million in Zurich, Geneva and Switzerland’s high-end tourism destinations.
The company has also just published its second annual “Immo-Monitoring”, an in-depth report on the market that shows a dangerous level of overheating in real estate in 102 communes, more than half of them in French-speaking Switzerland, reports news agency ats. Geneva is, to no one’s surprise, one of the hot spots: the price of single-family homes has risen 136 percent in 10 years (2001-2011) while the price of owner-occupied (PPE) apartments has risen 200 percent.
Overheating does not necessarily equate bubble, the consultancy’s Robert Weinert told ats. Investors have few alternatives and the 78,000 newcomers to the Geneva area in 2011 kept demand high.
The report parallels one published by Credit Suisse in February, which expect real estate prices, even high ones, to remain relatively stable: the elements needed to push prices down are not there, with immigration remaining high, confidence in markets high ad interest rates low.
“The effect of interest rates on the housing market is causing price distortions which are increasingly
growing at two distinct rates. Whilst one area experiences a run on condominiums like it
has never seen before, restricting the supply and so causing a worrying increase in property
prices, other areas face problems in placing rental properties, in particular new-build and upscale
properties, and only find relief in the persistently high rate of immigration. The trend is exacerbated
by the fact that the expansion of supply, driven by the increasing focus of institutional
investors on property, is increasingly focused on rented housing. As things currently stand, this
trend is likely to continue throughout the year as fundamental data remain unchanged. The result
will be increasing vacancy rates in the rental sector and continued price rises in residential
property offered for sale. Thanks to the low share of speculative real estate sales though, property
prices are not increasing as a result of a speculative price bubble, but rather as a result of a
overheating of demand. Falling demand and sharp rises in interest rates are much-feared triggers
that could bring about a possible price correction, though not in 2012.”
UBS real estate risk map Q3 2011 (click on image to view larger)
LAUSANNE, SWITZERLAND – The Swiss Real Estate Bubble Index, published quarterly by bank UBS, shows the housing market continuing to boom but not at risk of a housing price bubble, nationwide.
Morges is one of two new regions that have been added to the “at risk” of reaching the bubble stage, however, along with the Oberengadin region and new regions have been added for monitoring for risk.
The third quarter 2011 risk level is 0.58 on the scale that tracks slump, balance, boom, risk and bubble. “A value of 0.58 corresponds to the boom level and implies no elevated risk of a Switzerland-wide correction,” UBS notes.
“Only when the index surpasses a value of 1 is the market considered risky. The index reached its peak in the early 1990s at a level of 2.5 at the height of the last Swiss real estate bubble.”
The quarterly report shows some cooling of house prices but no change in trend foreseen for home mortgage debt.
Lake Geneva region remains expensive, Morges shifts to “at risk”
GENEVA, SWITZERLAND – The schedule and prices for trains during the Paleo Festival in Nyon are now out.
The CFF rail company’s RailAway plan offers 20 percent off on travel, to help reduce road bottlenecks and pollution created by the 230,000 music fans who descend on Nyon 19-24 July.
Sample prices: second class with a half-fare card, from Geneva CHF6.80, from Lausanne CHF13, from Fribourg CHF26.40.
The shuttle bus between the station and the festival grounds is free of charge.
Special night trains, one an hour in each direction, will run starting at 01:30, to Geneva and to Lausanne-Montreux.
Buses serving the region will be waiting for the trains. A special train to Fribourg is being added that leaves at 02:30, arriving shortly before 04:00.
Train tickets are available at CFF rail stations (windows and machines),via internet on the CFF Ticketshop and by phone, at Rail Service: 0900 300 300 (CHF 1.19/min from fixed line phones).
Annual variation in rents in Geneva since 1995, for non-subsidized housing: dark orange is all tenants, red is after a change of tenant, bright orange is no change in tenant and the blue line shows the spread, in points, for all groups (source: canton Geneva statistical office, 28 June 2011)
GENEVA, SWITZERLAND – Geneva’s rental prices for non-new housing increased by only 1.5 percent from May 2010 to May 2011, compared to an overall increase of 1.9 percent a year earlier, but the statistic hides a startling detail. Some 7 percent of the city’s “free” (not low-income subsidized housing) apartments saw tenants leave and when the new tenant arrived the average price increase was 17 percent.
The overall increase, 1.7 percent when subsidized housing is left out of the figures, was relatively low because inflation was only 0.3 percent and the reference interest rate, to which some apartment rents are tied, dropped from 3.00 to 2.75 percent.
The canton’s statistical office, Ocstat, released housing price figures 28 June. The greatest increases concerned small (1 and 2 rooms) apartments and those in buildings constructed before 1947 because of the cost of renovation work. Small apartments often have the same size and quality of kitchen appliances as larger ones, which explains the difference, says Ocstat.
“The main factor behind rent price increases is a change of tenant,” its annual rental prices report notes. Rent increases were only 0.4 percent overall when there was no change of tenant. The jump due to changing tenants is true for subsidized housing as well.
The greatest turnover in housing concerns small apartments.
GENEVA, SWITZERLAND – It will cost you only about CHF100 to go 300kph in China, on the Beijing-Shanghai route, but you won’t be behind the wheel, you’ll be in a passenger seat on the new high-speed train. The Chinese government 14 June unveiled the price schedule for the trains, which go into operation at the end of June, cutting travel time from the current high-speed train trip of 10 hours to under 5 hours.
China’s railway company will run 126 trains at 300kph every day and 54 trains at 250kph, as well as continuing to run 136 “normal” trains for the 1,318km journey. The fastest trains were originally scheduled to run at 350kph but the government decided to reduce the speed for cost and safety reasons.
Ticket prices in yuan will be RMB555 for second-class seats and RMB1,750 for first-class, for the 4-hour 48-minute journey. By comparison, a regular full-fare airplane ticket costs nearly RMB1,400 and the flight takes one hour, 40 minutes flying time.
Xinhua, the official news agency, issued a puzzling statement based on remarks by Vice Minister of Railways Hu Yadong at a press conference, that “Prices will float according to the market and for the good of passengers.”
China will continue to run 250kph trains, with tickets costing RMB410 to 650 for second and first class, respectively.
The new high-speed lines will also make it possible to “increase cargo transportation capacity by 140,000 tons per day and 50 million tons per year, according to Xinhua.
Cointrin airport, Geneva
Geneva, Switzerland (GenevaLunch) – Geneva appeared for a few short years to be of only marginal interest to airlines, after the demise of Swiss in 2002. That has changed and travellers to and from Geneva are now being wooed by airlines, who are offering more destinations. The latest wrinkle in this saga is something of a price war, with BA (British Airways) offering a new lowest price guarantee.
EasyJet stepped into the gap left by Swiss when it announced in 2007 that it was reducing long-haul flights from Geneva, obliging travellers to go via Zurich. The number of flights to several destinations, including London, briefly dipped before the low-cost airline began to build up its Geneva presence.
British Airways Friday 25 March announced that it is offering a guarantee of the lowest price on flights from Geneva to Britain, for Swiss residents who reserve online. The deal is part of a larger “price promise” for BA flights, effective immediately. It is a clear bid to fight the easyJet domination of Swiss airports, particularly Geneva, where it has 36 percent of passenger traffic, and Basel, where it accounts for 45 percent of passengers.
EasyJet has 32 percent of the airport’s passenger traffic, much of that between the UK and Switzerland.
Earlier in the week Swiss announced that it is stepping up the number of codeshare flights with its sister airline Edelweiss and when the new summer schedule starts 27 March it will offer shared flights to Pristina, Heraklion, Rhodes, Kos, Las Palmas, Tenerife, Mykonos, Santorini, Larnaca and Sharm el-Sheikh. It earlier announced that it is increasing connections with Athens to two flights a day and also adding several Basel and Zurich flights to a number of destinations (details).
Geneva, Switzerland (GenevaLunch) - Canton Geneva’s government president, Mark Muller, says the office that oversees property belonging to the canton is undertaking a vigorous housecleaning, and methodical review of several problem areas. He spoke at a press conference Thursday 9 February, following harsh political and media criticism after an audit brought to light several major problems.
These included buddy prices for some people renting cantonal property and mismanagement of some properties left to the state. The audit called for the government to clean up the situation by the end of 2012 but Muller says the governing council approved plans at a Wednesday night meeting to move more quickly.
Muller insists he will not step down, despite calls for him to do so.
Average price paid per square metre, for villas and apartments, by buyers of different origins, in 2000, 2004 and 2008 (Source: canton Geneva, statistics office)
Geneva, Switzerland (GenevaLunch) – The average price paid for a villa in canton Geneva is higher if the buyer is a foreigner, whether resident in the canton or not, and the role of non-Swiss buyers has increased significantly in the past decade, from 28 to 44 percent of all buyers.
Figures released by the statistics office in canton Geneva in November show that between 2004 and 2008 the price that foreigners were willing to pay for apartments and villas in Geneva took a sharp jump, compared to prices paid by Swiss buyers.
The price for all buyers rose significantly, but quarterly figures released in December show this was followed by a 2009 dip, then a climb again in 2010.
Foreigners paid 17 percent more per square metre: CHF7,564 compared to CHF6,464 paid by Swiss buyers, for apartments.
Geneva, Switzerland (GenevaLunch) – Let is snow, let it snow, preferably on our turf! Frankfurt and Paris were snowed in, but the sad news for skiers in Switzerland 10 December is that the snow that fell last week in the Jura has turned to mud, and the Alpine ski resorts are still waiting for the big snowfalls to arrive. You have a few more days to continue your pre-season warmup exercises and to reflect on safety on the slopes.
Weather forecast
Sun today! The first village house to get warm rays, canton Vaud 9 December
Temperatures are expected to go no higher than 2C throughout the Lake Geneva region this weekend, with sunshine alternating with partly cloudy skies. Expect resorts in Valais to have the same weather, but if you are longing to get warm, head for Ticino, where temperatures will reach 15C.
Alpine and Jura resorts updates
Shirley Curran writes from the Jura resorts area that “sadly, after last Saturday’s memorable start to our ski season where we were skiing with feather-light powder up to our knees, not a cloud in the sky and no crowds, this week’s torrential downpours and high winds have blown or washed away most of the Jura snow. The lifts will not be operating this weekend. However, they will be running every day from 18 December. You can keep up to date with information and webcams at montsjura.com.”
Several resorts in the Alps are offering reduced fares and special family offers. Sierre-Anniviers, which groups together several medium-sized resorts above the lakeside town of Sierre, including family-friendly Zinal and Vercorin, has a new special deal for parents. It allows a couple to share one ski-pass, for parents who are alternating taking care of children. It’s valid only in low season, basically January and March, but offers a good practical solution for many couples with small children or babies.
Anzere has a very good deal for this weekend, 11-12 December: CHF10 for kids and CHF20 for adults for a day pass, or CHF15/20 for two days, well below the season day pass price of CHF47. Slopes open for the season 17 December. Children up to age six are free and families of four get a 10 percent discount.
Verbier has put together an information page on parking and public transport, with useful emergency numbers, part of the effort to encourage skiers to be a bit greener.
On the lakefront, Geneva remembers a glorious moment from its past, and eats chocolate
Bern, Switzerland (GenevaLunch) - ‘Tis the season for electricity companies to tell us what we should budget for electricity for the next year, and the answer throughout Switzerland is: the price is rising.
ElCom, the Swiss Federal Electricity Commission, announced 7 September that on average Swiss households (family in a 5-room apartment, annual consumption 4,500 kWh) will pay 2o.2 kWh (kilowatt hours), a 2 percent increase, while small companies can expect a 3-4 percent increase for an average price of 19.7 kWh. French-speaking Switzerland generally has higher electricity costs than northern Switzerland.
Seventy-five percent of electricity companies have raised their prices, 20 percent have reduced them slightly and for 5 percent, there is no change.
The country’s 450 electricity suppliers had until the end of August to announce their 2011 rates to the government. The main reason for the increase is a 5-8 percent rise in the cost of raw electricity, says ElCom.
Swissgrid, the association of electricity suppliers, in May 2010 announced a price increase of 8 percent across the board, but the federal electricity commission intervened to temporarily freeze the prices of suppliers for 2011, saying they appeared to be unjustified. Swissgrid said at the time that “the main reason for the rate increase is that a considerably larger proportion of auction revenues for the long-term reliability of supply are to be used for essential investments in the transmission system than in the prior year – and less will be used for a short-term reduction in tariffs.” Swissgrid was created in 2007 to liberalize the Swiss electricity market.
Check out your rate increase and the explanation for it, compare with 2010 rates
ElCom in 2009 set up an online consultation site that lets consumers check prices in their communes for a variety of types of homes and businesses, compare these to villages and towns throughout Switzerland and see the breakdown of costs for the rates for each town.
Neuchatel, Switzerland (GenevaLunch.com) – Swiss consumers are paying one-third more for food than their EU counterparts, and as much as twice the price for meat, new federal statistics show.
The difference has increased in the past two years, thanks in large part to a strong franc as the euro has weakened.
Meat prices showed a marked difference because of production costs in Switzerland and because imports are strictly limited. The Swiss eat, on average, 53.45 kg of meat a year.
Cooking oil, fish, canned and dried goods all show price differences above the average.
Links to other sites: Swiss meat, TSR
Val d'Anniviers hydroelectric power plant
Bern, Switzerland (GenevaLunch) – Switzerland’s independent electricity authority, the EICom, said Monday 14 June that an 8 percent price hike announced by Swissgrid in May is unjustified.
The rates hike is for 2011 and would have a direct impact on consumer prices, EICom notes.
EICom has told Swissgrid that the new rates cannot be implemented for now, while it carries out a more extensive review.
Swissgrid is the national electricity carrier whose members are Swiss electricity companies.
Portugal nervous as it watches Greek debacle
Prices of shares throughout Asia and Europe slid Wednesday 28 April as investors became nervous about the impact on Europe of Greece’s financial situation. The rate of borrowing for Greece rose to its highest level in 14 years Tuesday while the country’s finance minister said it could no longer afford to borrow, and the US ratings agency Standard & Poor’s downgraded Green bonds to junk status. Portugul, which was also downgraded, is closely watching the Greek situation. The president of the European Council, Herman Van Rompuy, insisted Wednesday that Greece will not be restructuring its debt.
Links to other sites: Bloomberg, Financial Times, MSNBC, Times, UK
The Royal Bank of Canada has raised the interest rate on mortgages to 6.25 percent on five-year closed mortgages, the third increase in a month. RBC is the country’s largest bank and others are likely to follow, says The Globe & Mail, with the national bank saying that its key lending rate will rise in June.
Meanwhile, the prices, at least in Vancouver, are enough to raise the roof, reports McLeans.
Lake Geneva boats connect France with Vaud and Geneva in Switzerland
Lausanne, Switzerland (GenevaLunch) – Boat trips on Lake Geneva will go up by 5.5 percent in 2011, the CGN (Compagnie Générale de la Navigation) has announced, with smaller price increases on the Lausanne-Thonon line starting 1 June 2010. The 2011 ticket prices go into effect 12 December 2010, when Swiss public transport companies put new rates into effect. The Swiss federal government ordered public transport companies to delay price hikes in 2009, with the result that in 2010-11 they will be steeper than usual. The CGN says its increase is slightly under the average for Swiss public transport companies.
The CGN distinguishes between its tourist boats and public transport, with plans to develop more public transport in the next few years. The company’s traffic on the lake has grown steadily since 2002: from 1.37 to 1.85 million in 2009.
Housing prices rose in Great Britain in January 2010 for the first time in 10 months, but early reports for February show some slippage, down 1.4 percent over January. Prices are nevertheless 9.2 percent higher than in February 2009. The housing price news is accompanied revised figures published 25 February by the government that show the UK grew by 0.3 percent in the last three months of 2009, slightly more than earlier reports showed.
Links to other sites: BBC, Market Watch
Swiss train on a winter Sunday evening: always busy
Bern, Switzerland (GenevaLunch) - Switzerland’s CFF rail company will raise prices by 6.4 percent overall 10 December 2010. The recently voted increase in value added tax (TVA) of 0.4 percent is included. The Public Transport Union announced the hikes Thursday 14 January. The amounts of some of the changes come as a surprise, but higher than normal increases have been predicted widely because a year ago the government insisted that increases for 2010 be put off because consumers were hurt by the weak economy.
The half-price CFF card, the most popular discount, will be increased from CHF150 a year to CHF165. It is the first increase for the card since 1993.
The price of gold, which has risen 16 percent in the past year, reached a new record high of $1,048.40 ($1,054 an ounce for immediate delivery) 7 October as investors seek a hedge against the dollar. The Independent in the UK stirred fears earlier in the week with an article saying that oil-rich Arab nations could be moving out of dollars and into gold, although other market watchers disagree and the story was later discredited by several other media. A Credit Suisse gold market analyst told the Daily Mail that gold will continue to climb while investors move out of dollars. The Financial Times Thursday 8 October says “The depreciation of the US dollar is sparking growing jitters among critics of the Obama administration over the potential loss of America’s reserve currency status.”
The dollar Thursday morning was trading at $1.61/£, $.068/€ and $1/CHF1.03.
Links to other sites: BBC, Bloomberg, bullionvault, CS Monitor, Financial Times, goldprice.org, Guardian, UK, Independent, UK, Wall Street Journal/Dow Jones wire
Swiss food and drink cost you a little more in September 2009.
Bern, Switzerland (GenevaLunch) – Switzerland’s inflation rate fell slightly in September, down 0.9 percent, to an annual rate of 2.9 percent. The Consumer Price Index remained stable but the overall CPI is the result of a balance between imports,which have gone down in price and Swiss-made goods and services, which have risen slightly. It also hides differences that include falling prices for housing, energy and transport but rising prices for teaching, communications, food and drink, healthcare.
Biel/Bienne, Switzerland (GenevaLunch) – Swatch Group, which owns the parts-making company ETA Manufacture Horlogère SA, has responded publicly with dismay to news of a new Comco investigation into the impact of its dominant position in the market.
India’s consumers have the world’s biggest sweet tooth, and are struggling with rising prices for sugar and a dramatic drop in domestic production. For 60 million Indians, sugary milky tea is the main source of carbohydrates. Poor rains in June in India and excess rains in Brazil contributed to the world sugar shortfall, estimated at nine million tonnes, in 2009. It is the second year running that demand outstrips supply. Domestic production in India dropped 43 percent to 15 million tonnes, reports Bloomberg.
The price of refined, white sugar increased four percent in trading 10 September on speculation that India, Indonesia and Pakistan were to import more sugar. The world price of sugar almost doubled in 2009. BBC, Bloomberg, Economic Times, India
Starbucks Paris
In a move that may reflect the real impact on the street of the economic crisis, Starbucks is making its first-ever cut in prices. The company says, without specifying which markets, that it will cut popular small coffee and latte drinks by US 5-10 cents. At the same time, it will fine-tune its prices, reports Reuters, by raising the price of more complex drinks like frappuccinos and macchiatos by raising their prices up to 25 cents in some markets. Starbucks International, financial report 21 July
Neuchatel, Switzerland (GenevaLunch) – Prices for goods produced in Switzerland remained stable, down only negligibly and prices of imported goods were also stable, with only a very slight rise in July, the Swiss Statistical Office said Friday 14 August. This is the second month in a row that prices have remained stable. Prices are down 6.1 percent overall year on year, compared to July 2008, but the main reason is a significant drop in the price of oil compared to 12 months earlier.
Making prices crystal clear
Bern, Switzerland (GenevaLunch) – The hotel and restaurant industry in Switzerland is under pressure from the Swiss Federal Department of Finance to conform to newly published federal ordinance that covers room and food advertising and pricing. The ministry argues that transparent prices and the ability to compare prices are two essential ingredients in a market economy. Tourism is one of the country’s largest industries, with domestic and foreign tourists spending nearly CHF 21 billion (2004, latest figures).
The pricing regulations (pdf, Fre) include such details as ice cream with cream as an option: the cream should be priced separately. For lodging, the ordinance gives hotels this example:
price per night, breakfast included, sales tax and tourism tax, CHF120.00 (also includes the City Card with a value of CHF6.00, valid for all forms of public transportation).
A three-part special on housing and the international population in the Lake Geneva region: part 2
- Nominal GDP in the Lake Geneva region, Wuest & Partner index for aptmts, houses: 1998=100
Rents, Lake Geneva region increases compared to Switzerland, 2007
(Also see part 1:Geneva, Vaud apartment hunters struggle to find a place to call home)
Ed. note: click on images to enlarge
True or false
Rents have climbed continually in the Lake Geneva region
Mostly true, with rent increases outstripping those in the rest of Switzerland since 2002, when the rental market momentarily slipped.
True or false
The sale price of homes has climbed continually in the Lake Geneva region in the past 20 years
Overall, yes, up 179 percent from 1977-2008, but up 30 percent in 30 years in real terms: with cost of living increases taken into account. The increase has not been steady, however, with a big dip in the early 1990s, Swiss-wide, when easier mortgages led to a sudden bubble in prices, which then burst. Stricter rules were put in place: a home-owner’s debt cannot exceed 80 percent of the value of the property.
McDonald’s is cutting the prices of about 40% of its food products in China by 33%, reports Reuters, pushing the cost to consumers down to levels of 10 years ago for half of the fast food chain’s offer.
Cotton growers are turning to more profitable crops such as soybeans, corn and wheat, reports Bloomberg, setting the stage for a price jump as demand outstrips supply, at its lowest in five decades. The US and China, two of the largest exporters of cotton, are both planting far less in 2009, with the US crop expected to be the second smallest in a century and China considering a 21% cut.
Switzerland (GenevaLunch) - A battle has been brewing among supermarket chains, with lower prices the most obvious benefit to consumers. Migros Tuesday morning announced that it will lower the prices of 150 items in order to ensure its prices remain lower than those of its competitors.
After years of painfully high prices, the cost of an apartment in New York City is finally starting to fall, reports Reuters. The average apartment in Manhattan costs $1.4 million. While a survey of 20 metropolitan areas from May to October 2008 showed prices falling by 24% Manhattan “defied” the trend and prices continued to climb.
Bern, Switzerland (GenevaLunch) – The Swiss Federal Council has approved a price increase of 30 centimes on tobacco products, which will go into effect in the next few days.
