[ad_1]
Despite the recession, property prices in cities around the world continue to rise. In Zurich now there is even the risk of bubbles.
In the city of Zurich, house prices have risen no less than 70 percent in the last ten years. In contrast, income and rents increased much more slowly during the same period.
This gap is not sustainable, says Matthias Holzhey, a real estate specialist at UBS. “The market is driven by the belief that price only knows one direction” – up. But this belief is risky.
Meanwhile, property prices in Zurich have reached their limit and the risk of a correction is increasing, not just here, Holzhey says. There is also a higher risk of bubbles in Munich, Frankfurt, Toronto and Hong Kong.
Rents tend to fall
UBS no longer considers the evolution of property prices in these cities to be sustainable. A first harbinger of a price correction could be rents, which have fallen globally in some cities in recent quarters.
From a global perspective, the demand for urban living space is no longer increasing as strongly, says Holzhey. There are also short-term factors: for example, due to the corona pandemic, students were temporarily kept away, which has affected rental prices in urban centers.
In many places, apartments that previously offered platforms like AirBnB have also entered the rental market. That also depresses prices.
Why live in the center?
But the UBS real estate specialist sees another reason why rents are under pressure: “The pandemic has helped some people realize that work and residence do not necessarily have to be in the same place.”
That is probably why more people are moving out of town to live again. That means: Anyone who can work in the home office or decentralized in coworking spaces thinks twice about having to pay for an expensive apartment in the city.
However: the city is still attractive
However, Holzhey believes that it is excessive to deduce from this that the fundamental trend of urbanization could be reversed and a real urban exodus would occur. “After all, the city has not fundamentally lost its appeal during the crown crisis.”
The city can still get points in terms of public transport connections, cultural activities, schools and infrastructure. But now it is mainly immigrants who move to the cities.
You can see that in Zurich too. Many locals, on the other hand, prefer to buy an affordable house in the agglomeration or in the countryside.
