Swiss real estate prices to drop after immigration restrictions

Published:  3 Jun at 6 PM
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Following the limitations on new migrant numbers introduced by the Swiss Government last month, the country’s booming house price index is expected to slow.

According to Zuercher Kantonalbank, as immigration slows due to the reduction in permitted numbers, the pressure on the booming property market is expected to ease. High levels of immigration and the availability of cheap credit have fuelled the sharpest surge in house prices in the last 20 years.

Strong economic growth coupled with a relaxation in immigration laws between the EU and Switzerland resulted in a net inflow of 103,000 migrants in 2008, the highest ever recorded. Although the peak had fallen by 2011, the new ruling should reduce the numbers of incoming EU citizens even further.

ZKB Chief Economist Anastassios Frangulidis stated in his report that lower immigration over the next few years would return property price increases to a more moderate level. Zurich apartment prices should only rise by 3.5 per cent in 2013 and 3 per cent in 2014, and luxury properties will be the most affected, with present prices for such apartments probable already at a turning point.

Future immigrants may need different skills and educational qualifications than at present, as employment levels are declining in the construction industry and the banking sector. During the next five years, the number of jobs in the tourism industry and in manufacturing is expected to grow.

Potential immigrants with qualifications in those sectors will be attracted from EU countries enduring high rates of unemployment at present, such as Greece, Italy, Portugal and Spain. The present shortfall in highly qualified workers is expected to be filled by the increasing number of academically qualified Swiss nationals, reversing the recent 30 per cent decline in net German immigration.
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