Momentum in the Swiss mortgage market eased slightly in 2016, especially where owner-occupied residential properties were concerned. Prices rose more slowly in some regions, while some in the upper price segment actually fell. These changes indicate a correction to the partial overheating of recent years, and are probably also a consequence of regulatory measures having the desired effect.
Vacancy rates rose, particularly with regard to office space, due to reduced demand from the financial sector and elsewhere, leading to an increased risk of the mortgages on these properties not being covered by rental income. With monetary policy keeping yields low on other asset classes such as government bonds, this nonetheless prompted further significant investments in real estate, and in investment properties in particular. This trend towards buying properties to rent has grown markedly in recent years, with both institutional and private investors acting as purchasers. Investment properties are viewed as riskier than owner-occupied properties, as repayments of interest and capital are dependent on renting out the property and on receiving the corresponding payment of rent.
(From the Annual Report 2016)