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What factors influence real estate prices? A guide

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Real estate prices are always a topic of conversation, whether buying, selling or just out of interest. But what influences the value of a property? Precise data and analyses provide an insight into the development of real estate prices. In addition to price trends for residential real estate, detailed location assessments and micro and macro data analyses provide a solid basis for well-founded decisions.



In this article, we look at the key factors that determine real estate prices and explain why it is so important to understand them.



1. location, location, location

The best known factor is location. properties in high-end districts of city centers or popular suburbs are generally much more expensive. Proximity to workplaces, schools, shopping facilities and public transport also plays an important role. Good infrastructure and connections further increase the value of a property. In Zurich, for example, communities such as Kilchberg or Küsnacht are particularly sought-after, which leads to correspondingly high prices.


Switzerland: Property prices, price per m² and property valuation for your region – check now with properti’s property price portal.

To the property price portal


2. economic conditions

The general economic situation has a corresponding impact on the real estate market. In times of economic upturn, people are prepared to spend more money on real estate, which drives up prices. Conversely, economic uncertainties or recessions can reduce demand and thus prices. In cities such as Zurich and Geneva, which are considered international financial centers, global economic trends can quickly influence local real estate markets.


3. interest rates

The level of interest rates influences the affordability of mortgages. Low interest rates mean that borrowers can obtain more favorable loans, which increases the demand for real estate and causes prices to rise. High interest rates have the opposite effect and can dampen demand.


Here you can find the SNB’s current interest rates


4. supply and demand

As with most markets, supply and demand determine prices. A limited supply of real estate coupled with high demand leads to rising prices. Conversely, prices fall when supply exceeds demand. In large cities such as Zurich, living space is scarce, which leads to permanently high prices.


5. construction and land costs

The cost of building new properties and the availability of building land play a major role. Rising construction costs due to expensive materials or labor lead to higher property prices. The availability of building land can also influence prices: Scarce building land in popular areas drives up prices. Construction and land costs are particularly high in urban areas such as Geneva, which puts additional pressure on the real estate market.


6 Population growth and demographics

Increasing population growth increases the demand for living space. Demographic changes, such as a growing number of households, are also influencing demand. Regions with growing populations often see rising real estate prices.


In Switzerland, large cities such as Zurich, Geneva and Basel are particularly affected. Zurich, one of the most dynamic cities in Switzerland, is experiencing steady population growth. Young professionals, international specialists and students are moving to the city, increasing the demand for housing. This influx is leading to a sustained rise in real estate prices.


It is important for potential buyers and investors to take demographic trends into account. The rising demand in these metropolitan areas often also means a secure increase in the value of real estate. Those who invest early can benefit from the long-term positive developments.


Regulations, taxes and building codes can strongly influence the real estate market. Tax breaks for home buyers, stricter building regulations or changes in housing policy can have an impact on real estate prices.


Stay informed: Federal Office for Spatial Development


8. maintenance and modernization

The condition of a property is a price factor. Well-maintained and upgraded houses and apartments with modern facilities and energy-saving measures are more valuable. Investments in renovations or energy-efficient refurbishments can significantly increase the value of a property. Conversely, properties that have not been renovated lose value.


Does your property need renovation? Refurbish or sell?



Find out more in the blog ‘ESG sustainable property – opportunities and value appreciation’!

To the blog

9. environmental factors

Natural disasters such as floods or earthquake risks as well as the general quality of the environment (e.g. air and water quality) can have an impact on real estate prices. Real estate in areas with low risk and high environmental quality tends to be more expensive.


Conclusion

Understanding the various factors that influence real estate prices is crucial for buyers and sellers. A sound knowledge of the market helps you make smart decisions and realistically assess the value of real estate.

Whether you are planning to buy or sell a property, consider these factors to get the best possible price. Use tools and resources to analyze the market value of your property and stay informed.


The properti residential property price portal – Swiss property prices at a glance.

To the property price portal

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properti

Properti – we offer simple and understandable real estate expertise. Thanks to our many years of experience and focus on industry trends, we always have our finger on the pulse and can provide our clients with the most important information on real estate.

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