Optimism in the property market is growing
Results of the Property Survey Switzerland (Based on Q2, 2021, data)
According to property experts, the current outlook is clearly more positive than it was six months ago. Over the coming 12 months, the 690 experts questioned in the latest biannual FPRE survey expect prices for home ownership and apartment buildings to increase and rental prices to stabilize. The outlook regarding corporate property remains less optimistic.
The optimistic outlook that was communicated six months ago is intensifying: At 58.8 points, the price expectancy index for owner-occupied flats is considerably higher than it was six months ago and compares to the level recorded in the fall of 2000, which means that it is at its highest since 20 years; this is one of the outcomes of the Swiss Property Market survey, conducted biannually by FPRE among 690 industry experts participating. The upward trend is also discernible with regards to single-family homes: From 52.3 points, the price expectancy index climbed to 84.6 points. This development is noticeable all across Switzerland as well as in both segments. An increasing number of experts expects a further increase in property prices: While in the fall of 2020 around 40% of respondents expected prices to increase over the following 12 months, this value has risen to 62%. It seems that the players in the home-ownership market remain unfazed by the Corona pandemic.
At -5.0 points, the price expectancy index for the rental market is discernibly higher than it was six months ago (-25.5 points). At 70%, the majority of respondents is expecting rental prices to stabilize. In regions like Jura and Eastern Switzerland, however, more than 20% of experts are expecting to see decreasing rental prices; as many as 46% of respondents expect prices to decrease in Southern Switzerland. Despite rental prices being stable or decreasing, the experts partaking in the survey expect clearly increasing prices for apartment buildings, with the respective price expectancy index being clearly higher than it was in the fall of 2020 (72.6 points as opposed to 53.6 points). The highest index values were registered for the Zurich region, where 63% of participants expect prices to increase over the coming 12 months, with 12% expecting heavily increasing prices.
The corporate rental market on the other hand keeps being under pressure: Here, the experts expect a further decrease in office rental prices; at -78.6 points, the price expectancy index clearly remains in the negative. A negative development is also discernible for rack rent: In Q1 of 2021, the rack rent indices for office space are 3.0% lower than in the reference period of last year. The same negative trend is expected in terms of office and commercial buildings, with the respective index showing a negative of -36.1 points, which is slightly better than six months ago (-51.3 points). FPRE partner Stefan Fahlränder is convinced that “in combination with premises becoming available, the missing additional demand will likely keep driving the decrease in office rent and transaction prices for 2021”.
HEV-FPRE property survey and price expectancy indices: FPRE has been conducting a biannual survey of the Swiss property market since 2008, questioning experts regarding past and expected price developments on the property market. In addition, the HEV survey offers many years of time series regarding expert expectations. The price expectancy indices resulting from the two surveys are an indication regarding the future development of several property segments. The spring 2021 survey was conducted among 690 market experts from all over Switzerland.