More countries and are seeing residential property price rises year on year than at any time in the last decade but the average rate of growth is slowing significantly, the latest global index shows.
Prices for prime waterfront properties around the world are on average 40% higher than comparable properties inland, new research has found.
Housing market dangers are “especially acute” in Australia, Hong Kong, Canada and Sweden, Oxford Economics said, noting this has historically posed a threat to economic activity.
Fears that the global surge in asset prices could turn into a crash have heightened after central bankers in Switzerland and Norway indicated they may take hawkish action to address house prices and strained family finances.
For the majority of aspiring buyers, Swiss housing prices are out of reach. A report by Credit Suisse published in March described homeownership in Switzerland’s urban centers as a mirage, for most buyers with average earnings, despite the current low interest rates. Given the combination of high prices and strict mortgage requirements, “the low mortgage interest rates,” it said, are “merely an optical illusion for many households.” Recently, however, the rise in home prices has begun to slow nationwide. Claudio Saputelli, the head of global real estate research for UBS Wealth Management, said price growth had been sustained by falling mortgage rates, but lending restrictions and stagnating per capita income have had a mitigating effect since 2014. For luxury homes, asking prices have declined by roughly 5 percent since 2015 in most parts of Switzerland, Mr. Saputelli estimated, and sales prices have declined an additional 10 to 20 percent. “There is a mismatch between market prices and price expectations of sellers,” he said, that has resulted in “stalling sales.”
It suggested requiring citizens from countries outside the European Union plus Liechtenstein, Iceland and Norway to get permission to buy main residences in Switzerland.
Hong Kong is the world's most expensive city for expats, leapfrogging Angolan capital Luanda in the annual chart compiled by consultancy firm Mercer.
Luanda, which had consistently topped the list in recent years, fell in the ranking owing to the weakening of its local currency.
Zurich and Singapore were third and fourth on the list, unchanged from a year ago. Tokyo rose to fifth.
Switzerland’s property markets are currently providing strong growth for investors with the latest data showing total returns of 6.6% in 2015.
This was up from 5.2% in 2014, which the index report from investment support tools firm MSCI says reflects continued strong growth in the Swiss properties sector.
It also says that the strength of Swiss property market signals that the sector benefited from the Swiss National Bank’s (SNB) move last year to scrap the franc’s peg to the euro and lower interest rates.
Prices for holiday homes have dropped as much as 15 per cent in the past three years, according to Swiss bank UBS.
Demand for Alpine property is rising, spurred on by a more resilient Eurozone, greater clarity over tax and the second home cap in Switzerland, as well as a weaker euro, says a new analysis report.
The latest results of the Knight Frank Prime Ski Property Index underline a broadly stable market environment with only 13% percentage points separating the strongest and weakest performer.
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