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Real estate prices following the pandemic in Europe and Switzerland

The demand for real assets, especially real estate, is enormous in Europe. Unless interest rates rise sharply or the economy slows down, this situation does not seem to be easing.

House and apartment prices have risen sharply in many European countries, including Switzerland. For many experts, this is a real estate bubble, but in relation to the liquidity injected by central banks (ECB, Bank of England, Royal Bank of Sweden and SNB), it seems that this situation of high prices could remain on a long-term basis, in particular in urban centers, many of which are at record levels.

The bursting of a bubble, or at least the stabilization of prices that some experts predicted at the height of the pandemic in 2020, has not materialized. This is demonstrated by a survey of the European countries with the highest price increases (see source: and this article also includes the particular situation in Switzerland.

  • In the first quarter of 2021, sales prices rose by 11.3% in the European Union, with particularly high increases in Luxembourg (+17.0%) and Denmark (+15.3%).
  • Compared to Austria, no other country in Europe currently has so much construction: However, real estate prices are not falling, even with this increase in supply. A strong and sustained demand explain this apparent anomaly.   
  • In Germany, some experts are worried about a real estate bubble, but the Bundesbank remains cautious and prefers to speak only of an overheated market. Property prices have increased by 62% in ten years in urban centers, with some cities experiencing spectacular price increases. In Frankfurt, condominium prices have even doubled over the same period, as has Munich, where prices for single-family homes have increased by more than 122% over ten years.
  • In Sweden, historically low interest rates and the desire for home ownership accentuated by the pandemic have also pushed prices up.
  • In Britain, the government is working to keep the island’s housing market attractive post-Brexit, but the tax-free threshold for property purchases dropped again in July, causing short-term demand to fall. Structural factors should continue to fuel the boom in the medium term. In London, prices have risen sharply and property in the capital costs on average 510,000 pounds.

Switzerland has also seen a sharp rise: In the first quarter of 2021, the average price of a condominium rose by 8%. This is because too few residential buildings are being built and at the same time, the pandemic has increased demand for real estate, especially near Lake Geneva where prime locations have increased by 10% since last year (with a price per square meter of at least 36,000 Swiss francs (33,500 euros) in the Geneva suburb of Cologny.

Therefore, in Switzerland, as in many places in the world, the demand for real assets, especially real estate, is enormous. On the other hand, supply is minimal, which explains why real estate prices continue to rise (by more than 6% since 2020), even though the level was already very high.

These stresses are also affecting sales intermediaries, as real estate agents looking for new properties send out more flyers, make direct phone calls, buy contact lists, go door-to-door to encourage homeowners to sell their homes, and check the obituaries. This cold calling is an approach that does not match the mentality of the older Swiss, who make up a large portion of the homeowner population.

Unless interest rates rise sharply or the economy slows down, this situation does not seem to be easing in many European countries, including Switzerland (see also the practical article on property purchase in Switzerland).

Source: Risiko Immobilienblase: So gefährdet sind die Häusermärkte in Europa, Handelsblatt, 31.8.2021