Living it up in Switzerland has become even more pricey, a new report shows, despite falls in prices for imported goods such as cigars and champagne which have become more affordable thanks to the rise in the Swiss franc.
According to the Affluent Luxury Living Index, compiled by the Stonehage Group, the cost of luxury living rose by 1.2 percent in August from a year ago, exceeding the Swiss inflation rate (CPI) in the same period by 1 percent.
The modest increase in the price for a basket of typical luxury goods comprising property, cars and jewelry follows two consecutive years of declines of 6.2 percent.?
Until the end of August, the Swiss franc gained more than 20 percent against the dollar and 10 percent against the euro within one year.
Thanks to the appreciation of the Swiss franc, many imported luxury products were cheaper compared to last year. For example, the price of imported cigars fell by 10 percent; 11 percent were knocked off the price for expensive champagne, while luxury travel even saw a 20 percent slump in prices.
However, the favorable currency moves could not offset the relentless trend of rising property prices and rents in Switzerland`s famously expensive cities Zurich and Geneva. Record low mortgage rates, scarcity of land and the cities' attractiveness for highly skilled, wealthy labor from abroad have led to an upward spiral in property rents since 2009.
In Zurich, rental prices topped those in Geneva for the first time since the survey began in 2007, rising by 12 percent against an increase of only 4 percent in Geneva.
The Swiss National Bank has repeatedly warned of rising property prices as being a great threat to the economy, but it is constrained in raising rates by the appreciation of the Swiss franc.
The study reveals that other items adding to the increase in the cost of living are art (plus 8 percent) and a "top end lake boat" (plus 5 percent).
And there is no let-up in sight for the rich in Switzerland.?
Mark McMullen, Executive Director of the Stonehage Group in Geneva says : "The Swiss National Bank’s decision to peg the Swiss Franc against the euro is likely to add further to general inflationary pressure."?