Switzerland defying global property downturn as prices continue to rise

The property market in Switzerland is defying the global real estate downturn and average house prices have increased by almost 4% in 2008, it is claimed.

While property prices plummet in other European countries demand in Switzerland is still strong, partly due to a traditional shortage of supply but also due to increased interest in what has always been regarded as safe investment location.

There may be turmoil elsewhere but in Switzerland a reputation for exclusivity and a steady investment environment is proving attractive, according to real estate professionals.

Most notably, prices for chalets in the traditional Alpine ski resorts have risen by as much as 20% in the past year alone, according to the real estate agency Savills.

Buyers are showing particular favor for the cantons of Vaud and Valais in the southwest, predominantly French-speaking part of the country, made popular by its well-known ski resorts, including Villars in Vaud and the Verbier and Four Valleys resorts in Valais.

Recent sales suggest that the market has yet to be affected by the global recession.

According to the Swiss firm Wüest & Partner, which tracks national house prices in conjunction with the country's Federal Statistics Office, average house prices in Switzerland rose by almost 4% percent from 2007 to 2008, against a backdrop of falling prices elsewhere in Europe.

In popular tourist areas, prices have risen even more steeply owing to limited supply and a surge in foreign buyers in recent years, according to Herbert Stoop, a managing partner at the advisory firm DTZ in Zurich.

'Prices in tourist destinations in Switzerland have risen exorbitantly in the past five years as they're so exclusive. Prices in many areas have risen by 50% in the period,' he said.

Foreign buyers in Switzerland are predominately from Britain, the United States, Germany, Italy and France. Although more wealthy Russians are showing interest.

The Swiss federal government is issuing 1,500 permits a year for foreign buyers, up from a previous level of 1,440, which are divided among the various cantons. The Valais region gets 330 permits a year and Vaud gets 175.

Before 2007 it could take as long as four years for a foreign buyer to acquire the title deed to their home. Now, however, cantons can grant half their permits to existing applications, rather than just new ones, so it typically takes up to a year, explained Martyn Bell of the Swiss Property Sales agency, in Britain.