Housing markets in Austria, Germany and Switzerland

Running counter to the sharp rise in house prices and housing wealth observed since the mid-1990s i n t he v ast m ajority o f E uropean c ountries, r eal house prices in Germany and Austria were going down in this period and did not start to rise until 2010 or 2007, respectively. This reflects national idiosyncracies in housing markets and motivated the discussion of relevant peculiarities in, and similarities among, Austria and Germany as well as Switzerland. Among the most important structural features that ensured housing market stability in these three countries during the last decade are well-developed rental markets, low homeownership ratios and conservative lending standards. While the tax systems of Germany and Austria do not encourage indebtedness, Swiss taxpayers benefit from taking on a lot of leverage. Recent house price increases in all three countries under review here can be attributed to various crisis-related channels (extremely low interest rates, economic uncertainty, safe-haven effect) as well as to demographic developments, including immigration. The Swiss authorities have already implemented a number of macroprudential measures to safeguard the banking sector.