Property Market Switzerland 2024 | 2

The Swiss economy has lost some of its momentum recently. Real GDP growth is currently below the average of the last 10 years, a situation that is hardly likely to change in 2024 (forecast: +1.1%). Weak demand from abroad – due to the stagnation of the German economy, among other things – and the strong Swiss franc are putting the manufac­turing sector under pressure.

On the other hand, the Swiss labour market is robust and employment continues to grow, albeit not quite as strongly as before: year-on-year job growth amounted to 1.7% in the fourth quarter of 2023, and was as high as 2% in the services sector. The job vacancy rate remains in the region of 2%.

Inflation has come down more quickly than expected and stood at just 1.2% in February 2024. Combined with signif­i­cantly lower infla­tionary expec­ta­tions, this enabled the SNB to respond in March 2024 by initi­ating the first key interest rate cut since 2015. Although inflation did then rise once again to 1.4% in April, it remains well within the SNB’s target bandwidth.

The lowering of key interest rates is likely to provide real estate markets with renewed stimulus – partic­u­larly as the current environment makes it likely that there will be at least one further rate cut before the year is out.