Swiss Property Market Stable despite Global Credit Crisis!

Switzerland shows growth while others are in decline:

While the world is coming to grips with the end of the global house price boom, the property market in Switzerland is enjoying sustainable growth. To understand why the Swiss property market is defying all the odds, you need to understand the Swiss and their property market history.

In the late 1980’s and early 90’s, the Swiss property market experienced a soaring apartment and house price boom which saw increases of between 8.8% p.a. to 18% in the early 1990’s. Reacting to concerns over runaway house price inflation, the Swiss National Bank increased interest rates. Between January 1989 and October 1992 interest rates rose from 4.9% to 7.9%. This interest rate rise had the effect of crashing the Swiss property market as most Swiss property mortgages were on a variable rate basis.

This shock crash of a booming property market combined with restrictions on foreign ownership left the Swiss property market to recover at extremely conservative rates compared with the rest of the world. The Swiss themselves also have a culture of long memories combined with financial conservatism. Following the crash, citizens have taken an extremely conservative approach to the Swiss property market. Even as interest rates have dropped lower than boom time rates (3.35%), the Swiss property market has seen moderate and sustainable gains compared to the rest of Europe, the UK and the global property market.

Why the Swiss property market is good news for investors

In a world where property prices throughout Europe, the UK and US are on a steep downward turn, this premature correction in the Swiss property market is good news for investors. Why? Buyers can feel confident they are not buying into an inflated property market in Switzerland ensuring limited or no negative retraction in Swiss property prices. Instead, all the projections for the Swiss property market are for incremental and sustained growth. For Investors already in the Swiss property market, this ensures their equity is solid and their money is in one of the few safe havens left in the global economy. At a time when people around the world are wondering where they can find a safe place for their money with hopes of returns - the Swiss property market is offering a solid investment with sustainable growth. This is great news for foreign investors interested in the Swiss property market or wanting to find a safe place for their funds.

The imposed limits on foreign ownership through the quota and permit system have led to an increase in the Swiss property prices as demand in property ownership and rental properties have risen, yet the amount of planning applications have slowed down through the end-quarter of 2008.

Swiss property market & chance to cash-in on tourism dollars

In January, 2007 the Federal Government of Switzerland opened the Swiss property market to foreign investment with a scheme that both protects the property market from high inflation, while also encouraging foreign investment. The regulations brought in by the Swiss Federal Government set an annual quota of permits for non-citizens to buy Swiss property. The current quota is 1,440 permits. These permits are then subject to authorization of the 26 individual Swiss cantons (counties). Non-residents are now able to apply to buy Swiss properties where permits are available, and are also liable for tax on any income generated from Swiss sources and these taxes include federal, cantonal and municipal taxes.

Although Federal Swiss Government regulations do not allow non-citizens to rent out their properties on a full time basis, foreign-owned properties can be rented out for a total of eleven months and one week each year. This is great news for investors as Switzerland is a very popular tourist destination within Europe, with tourism in Switzerland accounting for over 3% of the GDP. Not limited to Europeans alone, the numbers of Asian, American and African tourists visiting Switzerland have steadily increased over the past four years, with a 27% increase in the numbers of tourists coming from Asia. The following are the top destinations for foreign and domestic tourists in Switzerland:

Within each of the top Swiss tourist destinations are a number of cantons in which foreigners can apply for permits to own property. The Swiss tourist industry has a long traditional history and has been shown not just to survive past economic crisis but to experience an increase in tourist numbers during economic instability in the region and world (Journal of Teaching in Travel and Tourism, Tourism Education in Austria and Switzerland Past Problems and Future Challenges Vol 5 Issue 1/2 2005).

To ensure that Switzerland remains a top tourist destination over the long-term, the Swiss have heavily invested in infrastructure to serve popular tourist destinations. One example of this is the US$160 million investment in ski lift infrastructure around the 4 Valley Ski Areas (Valais) to ensure that Switzerland remains the top destination for skiing holidays in Europe.

Foreign investors have the opportunity to buy property in the stable Swiss property market, experience sustainable growth in equity while also taking advantage of one of the worlds most established and enduring tourist markets. To take advantage of the huge benefits the Swiss property market is offering you will need to know which cantons are offering what number of permits, along with being able to process your application with the necessary approvals.

Swiss Sun offer long-standing expertise and experience in all aspects of the Swiss property market. They can advise you on any permits available to non-residents in your preferred areas in Switzerland, along with offering a service to fast-track the application process. With Swiss Sun at your side, you can make informed choices about which property in Switzerland best suits your investment or property needs, while experiencing hassle-free Swiss property ownership with no long or drawn out waiting periods for approvals.