Skip to main content

Time-Varying and Regional Dynamics in Swiss Housing Markets


In light of the strong increase of house prices in Switzerland in the 2000s and early 2010s, we analyze the effects of mortgage rate shocks, changes in housing demand & supply and business cycle conditions on house prices for the time period 1982–2013. We study intertemporal effects by employing Bayesian timevarying coefficients vector autoregressions (TVC-BVAR), regional effects by using regional BVARs and heterogeneity in housing markets by looking at housing segments. 50 % of house price variations can be explained by housing demand & supply. The response of house prices to mortgage rate shocks weakened after the 1990s real estate crisis and remained constant thereafter. However, owneroccupied apartment prices became again more sensitive to mortgage rate shocks during the recent house price boom. Regional effects are especially prevalent for regions Zurich and Geneva.


  • Assenmacher, Katrin, and Stefan Gerlach (2008), “Monetary Policy, Asset Prices and Macroeconomic Conditions: A Panel-VAR Study”, Working Paper 149, National Bank of Belgium.

    Google Scholar 

  • Basten, Christoph, and Catherine Koch (2015), “The Causal Effect of House Prices on Mortgage Demand and Mortgage Supply: Evidence from Switzerland”, Journal of Housing Economics, 30, pp.1–22.

    Article  Google Scholar 

  • Belke, Ansgar, and Walter Orth (2007), “Global Excess Liquidity and House Prices — A VAR Analysis for OECD Countries”, Ruhr Economic Papers, 37, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.

  • Berlemann, Michael, and J Freese (2013), “Monetary Policy and Real Estate Prices: A Disaggregated Analysis for Switzerland”, International Economics and Economic Policy, 10(4), pp.469–490.

    Article  Google Scholar 

  • Borowiecki, Karol Jan (2009), “The Determinants of House Prices and Construction: An Empirical Investigation of the Swiss Housing Economy”, International Real Estate Review, 12(3), pp.193–220.

    Google Scholar 

  • Bourassa, Steven, Martin Hoesli, and Donato Scognamiglio (2010), “Housing Finance, Prices, and Tenure in Switzerland”, Journal of Real Estate Literature, 18(2), pp.263–282.

    Google Scholar 

  • Brown, Martin, and Benjamin Guin (2013), How Risky are Residential Mortgages in Switzerland?, Swiss Institute of Banking and Finance.

    Google Scholar 

  • Carter, Chris K., and Robert Kohn (1994), “On Gibbs Sampling for State Space Models”, Biometrika, 81(3), pp.541–553.

    Article  Google Scholar 

  • Credit Suisse (2015), “Real Estate Market 2015 — Structures and Prospects”, March.

    Google Scholar 

  • Degen, Kathrin, and Andreas M. Fischer (2010), “Immigration and Swiss House Prices”, Working Paper 16, Swiss National Bank.

    Google Scholar 

  • del Negro, Marco, and Frank Schorfheide (2011), “Bayesian Macroeconometrics”, in The Oxford Handbook of Bayesian Econometrics, John Geweke, Gary Koop, and Herman van Dijk, eds., pp.293–389, Oxford: Oxford University Press.

    Google Scholar 

  • DiPasquale, Denise, and William C. Wheaton (1994), “Housing Market Dynamics and the Future of Housing Prices”, Journal of Urban Economics, 35(1), pp.1–27.

    Article  Google Scholar 

  • Gambetti, Luca (2005), “Technology Shocks and the Response of Hours Worked: Time-Varying Dynamics Matter”, Manuscript, Universitat Pompeu Fabra, Barcelona, Spain.

    Google Scholar 

  • Goodhart, Charles, and Boris Hofmann (2008), “House Prices, Money, Credit, and the Macroeconomy”, Oxford Review of Economic Policy, 24(1), pp.180–205.

    Article  Google Scholar 

  • Hamilton, James Douglas (1994), Time Series Analysis, Cambridge University Press.

    Google Scholar 

  • Hott, Christian, and Pierre Monnin (2008), “Fundamental Real Estate Prices: An Empirical Estimation with International Data”, The Journal of Real Estate Finance and Economics, 36(4), pp.427–450.

    Article  Google Scholar 

  • Kim, Chang-Jin, and Charles R. Nelson (2003), State-Space Models with Regime Switching: Classical and Gibbs-Sampling Approaches with Applications, vol.1, Cambridge: MIT Press Books.

  • Koop, Gary, and Dimitris Korobilis (2010), “Bayesian Multivariate Time Series Methods for Empirical Macroeconomics”, Foundations and Trends in Econometrics, 3(4), pp.267–358.

    Article  Google Scholar 

  • Müller-Jentsch, Daniel, and Lukas Rühli (2010), „Raumplanung zwischen Vorgabe und Vollzug: Inventar der kantonalen Instrumente zur Siedlungssteuerung“, Kantonsmonitoring, Avenir Suisse.

    Google Scholar 

  • Steiner, Elizabeth (2010), “Estimating a Stock-Flow Model for the Swiss Housing Market”, Swiss Journal of Economics and Statistics, 146(3), pp.601–627.

    Article  Google Scholar 

  • Tsatsaronis, Kostas, and Haibin Zhu (2004), “What Drives Housing Price Dynamics: Cross-Country Evidence”, BIS Quarterly Review, 3, pp.65–78.

    Google Scholar 

Download references

Author information

Authors and Affiliations


Corresponding author

Correspondence to Dirk Drechsel.

Additional information

We are grateful to Klaus Abberger, Samad Sarferaz, Jan-Egbert Sturm and Cédric Tille for valuable comments and discussions. We further thank Florian Eckert for valuable research assistance and seminar participants at ETH Zurich and the Geneva Graduate Institute of International and Development Studies as well as two anonymous referees for helpful comments.

Rights and permissions

Open Access  This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made.

The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

To view a copy of this licence, visit

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Drechsel, D., Funk, A.K. Time-Varying and Regional Dynamics in Swiss Housing Markets. Swiss J Economics Statistics 153, 37–72 (2017).

Download citation

  • Published:

  • Issue Date:

  • DOI: