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How a cross-border train has pushed house prices up in Switzerland and France

A commuter rail link between Switzerland and France has caused property prices on both sides of the border to rise sharply.

How a cross-border train has pushed house prices up in Switzerland and France
Private universities market their location near international institutions to attract students to Geneva. (Image by 495756 from Pixabay)

When the Léman Express (LEX) was inaugurated in December 2019, its main goal was to connect the Geneva region with neighbouring French towns and provide a quicker commute for cross-border workers.

Established by the Swiss (SBB) and French (SNCF) railway companies, LEX is Europe’s largest cross-border regional rail network.

Some of the approximately 92,000 employees from France commute to their jobs in the Lake Geneva region by car, while others prefer to take Léman Express, which was launched specifically to reduce journey times and cut traffic in and around Geneva.

But while this goal has been largely achieved – the train carries 52,000 passengers a day — the rail link is also causing rents and property prices in the vicinity of the train’s 45 stations to soar by 8 to 9 percent on average — a sharper increase than elsewhere in the region.  

Prices rose in the French departments of Haute-Savoie and Ain, as well as in Swiss cantons of Geneva and Vaud, all of which lie along Léman Express’ 230-km track, according to Tribune de Genève (TDG).

Screenshot Léman Express

Why has this happened ?

As a general rule, transport infrastructure influences real estate prices, according to Dragana Djurdjevic, statistician at Wüest Partner real estate consultants interviewed by TDG.

Increases vary based on the type of transport —such as trains, buses or trams — as well as the frequency and the distance of the property to the nearest stop.

Typically, prices / rents are the highest within 300 metres around a station.

In general, Swiss and French municipalities with a LEX station have recorded significantly higher rents and sale prices than areas that have no access to the train, Djurdjevic said.

Just how much have prices increased along the LEX line?

On  the Swiss side, rents rose by 4.9 percent along the track.  In Geneva itself (already the most expensive rental market) , they went up by 1.5 percent, and only slightly less (1.4 percent) in Vaud.

READ MORE: Why is Geneva’s rent the highest in Switzerland?

In terms of properties, prices along the network rose by 17.7 percent; in Geneva the increase is 12.3 percent, and 13 percent in Vaud.

In neighbouring France, rents increased by 6.1 percent along LEX stops. In Haute-Savoie, the increase is 6.3 percent and in Ain 9.1 percent.

Sale prices went up by 15.7 percent along the track, 14.8 percent in Haute-Savoie and 23.7 percent in Ain.

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Zurich tops worldwide ranking of cities at risk of housing bubble

Only two cities - Switzerland's Zurich and Japan's capital Tokyo remain at risk of a housing bubble, according to a new ranking.

Zurich tops worldwide ranking of cities at risk of housing bubble

The UBS Global Real Estate Bubble Index 2023 found that only these two cities remain in the bubble risk category, down from nine cities a year ago. Zurich had the highest score of 1.71, while Toyko scored 1.65

It means that house prices are grossly overvalued in Zurich. But, according to the study, rental prices in the Swiss city are rising even faster than real estate. Rent increases of five percent are possible in the next years, UBS real estate experts say.

In the comparison of 25 cities worldwide, home prices fell by five percent between mid-2022 to mid-2023.

Last year, Toronto topped the ‘bubble risk zone’ in the ranking complied by UBS. It was followed by Frankfurt, Munich, Hong Kong, Vancouver, Amsterdam, and Tel Aviv. Although property in these cities remain high, they have dropped into the ‘overvalued’ category as the price boom has ended, according to UBS.

The housing markets in Miami, Geneva, Los Angeles, London, Stockholm, Paris, and Sydney remain overvalued according to this year’s ranking. 

The financial giant put the movement down to the surge in inflation and interest rates which have “led to a sharp decline in imbalances in the housing markets”.

However, UBS points that these changes have not been enough to “meaningfully improve affordability”.

On average, the amount of living space that is financially affordable for a skilled service worker is still 40 percent lower than before the pandemic began.

UBS added that the next property boom is already on the horizon as housing shortages get worse and fewer building permits are issued, particularly in European cities.

Matthias Holzhey, lead author of the study at UBS Global Wealth Management, said: “Housing demand continues to accumulate and prices may rebound as soon as financial conditions for households improve.”

What’s happening in Zurich’s housing and rental market?

A housing bubble is a market condition where prices rise beyond what most believe is reasonable or sustainable.

UBS found that home prices in Zurich continued to rise in 2023 even if it has been a slower pace than previous years. 

Compared to 10 years ago, prices are now 50 percent higher. Property owners have no pressure to sell, which is why prices remain high, according to UBS real estate experts.

READ ALSO: Where property prices are rising the most in Switzerland

However, due to rising financing costs with higher mortgage interest rates, the supply of properties for sale has increased. Plus, there is a lot of construction going on in Zurich. UBS therefore assumes that the price hikes will stablise and the risk of a bubble will decrease, with Zurich likely to come out of the bubble zone in two years.

Meanwhile, rents have “accelerated sharply”, according to the ranking – and have even risen faster than house prices. 

Compared to the previous year, rents are now nine percent more expensive – the strongest hike in Switzerland.

Rental prices are likely to remain high due to the lack of housing and population growth. Price increases of three to five percent are possible per year, said UBS. 


What’s happening elsewhere in Switzerland?

According to UBS, house prices in Geneva are less than 20 percent higher than 10 years ago and stagnated between mid-2022 and mid-2023.

“Although the city benefits from its international status, the economic outlook is mixed, and population growth remains subdued as out-migration to more affordable regions is significant,” said UBS in the study.