Demand for condominiums is highly dependent on region and price
Demand for condominiums fell in Switzerland in 2021. Because: although the number of condominiums advertised online nationwide last year fell by almost 20 percent compared to 2020, the average length of advertisements increased by one day at the same time. However, the latest online home market analysis showed growing demand for condominiums in the regions of central Switzerland, north-western Switzerland and Zurich, and for expensive properties in six of the eight cities surveyed
The latest edition of the Online Home Market Analysis from the real estate portal Homegate and the Swiss Real Estate Institute (SwissREI) examines the advertisement data for condominiums for 2020 and 2021. The evaluated advertisements come from the four largest Swiss Internet portals and thus comprise around 85 percent of all online advertisements during the period under review. Detailed reports on the study for all regions can be found here in the online media release .
For Martin Waeber, Managing Director Real Estate, SMG Swiss Marketplace Group, the latest online home market analysis shows how heterogeneous the Swiss condominium market is: “Overall, the demand for condominiums throughout Switzerland developed somewhat less dynamically last year due to the corona. However, certain market segments have seen lively demand over the past year, particularly in cities.” On average, the duration of advertisements in the low price segment has increased significantly in the cities examined, while it has remained practically unchanged in the higher price segment, although the number of advertisements has increased. “Similar to the rental apartment market, preferences in the condominium market have shifted away from smaller and cheaper to larger and more expensive properties during the Covid19 pandemic,” said Waeber, summarizing the study results.
Longer advertisement duration despite smaller offer
The significant increase in the average tendering period for condominiums from 61 to 84 days in 2020 compared to 2019 due to the Covid19 pandemic was confirmed at a high level in 2021 with 85 days. In comparison, the length of listings for single-family homes has fallen from just over 61 days in 2019 to pre-pandemic levels.
On the other hand, around 20 percent fewer condominiums were offered online across Switzerland in 2021 than in the previous year. With such a severe shortage of offers, one would expect that the average duration of advertisements would also be correspondingly shorter. However, the fact that this has not shortened, but actually lengthened slightly, is evidence of a declining demand for condominiums across Switzerland for 2021.
Prof. Dr. Peter Ilg, head of the SwissREI institute, sees several reasons for the weaker demand for condominiums: “Condominium prices in Switzerland rose by more than 8 percent on average in 2021. This is the strongest price increase in ten years. Such a significant increase in prices is likely to have had a dampening effect on demand in general. Increasing demand can only be seen in selected regions and in individual upper price segments, in which the buyers were probably able to increasingly resort to advance inheritances». This can be deduced, for example, from the distribution of taxable assets and homebuyers by age group. In the canton of Zurich, for example, the over-54s have more than half of the taxable assets, while across Switzerland the majority of home buyers are under the age of 55, Ilg continues.
Regional differences in the duration of advertisements are increasing
From a regional perspective, the differences in the duration of advertisements in the eight major regions examined in 2021 have become more pronounced. In the Zurich region, where sellers have to advertise a condominium for the shortest time in Switzerland, the duration of the advertisement was reduced significantly by around a quarter to just 43 days (minus 14 days). In the two regions with the longest average duration of advertisements for a condominium, on the other hand, they continued to rise significantly, each at around 22 percent; the Vaud/Valais region recorded an increase of 18 to 98 days, Ticino by 25 to 139 days.
In absolute terms, the greatest reduction in the length of advertisements was seen in the Central Switzerland region. After a decline of 19 days (minus 27 percent) for 2021 with 51 days, this region now has the second shortest advertisement duration of all eight regions surveyed, right after the Zurich region. The Geneva region, on the other hand, which still had the shortest advertisement duration in Switzerland at 52 days in 2020, fell back to third place in 2021 after an increase of 12 percent (plus 6 days).
Increasing demand only in three out of eight regions examined
The combination of the change in the duration of advertisements and the change in the number of advertisements allows conclusions to be drawn about the change in demand in the regions examined. In the three regions of Ticino, Vaud/Valais and Geneva, for the year 2021, despite a shortage of supply (i.e. a declining number of advertisements), there has been a significant increase in the duration of advertisements in some cases and thus a shrinking demand for condominiums. For the three regions of Central Switzerland, Northwestern Switzerland and Zurich, on the other hand, increasing demand (larger percentage decline in the length of advertisements than in the number of advertisements) can be observed. The other two regions (Eastern Switzerland and Espace Mittelland) show constant demand for 2021.
Growth in demand for city apartments, especially in the upper price segment
In addition to the eight regions, the Online Home Market Analysis also examines eight Swiss cities. When analyzing the demand for condominiums, a closer look at the price segment shows that demand in Basel, Lausanne, Geneva and Lugano in particular has increased. Both in the high price segment (CHF 1.5 million – CHF 3.0 million) and in the low price segment (CHF 0.3 million – CHF 0.5 million). In the high price segment, demand increased overall in six of the eight cities surveyed – in addition to Basel, Lausanne, Geneva, also in St. Gallen and Lucerne – while in the low price segment, the remaining four cities recorded constant or falling demand. This increased demand in the high price segment is now taking very different forms; While in Basel the declining length of advertisements in particular led to higher demand, in Geneva a much higher increase in the number of properties on offer compared to the length of advertisements indicated this conclusion.