(Bloomberg) -- The boom for holiday homes in Switzerland is approaching a turning point, according to UBS Group AG.

While prices rose 7% in the first quarter from a year earlier, rising maintenance costs, waning demand and the growing stock of second homes are likely to curb a further big increase in home values this year, research by the country’s biggest bank showed. 

“We expect prices to stagnate this year on average — they could even fall a bit,” real estate analyst Maciej Skoczek told reporters on Friday. “In the coming years, we will likely see a turnaround: Holiday-home prices will develop below the average of the broader market. That’s different from the pattern we saw up to now.”

The cost of a second home in Switzerland is still 20% higher on average than before the pandemic. Since 2020, Arosa, Flims-Laax and Engelberg were among locations that saw the biggest price increases across the Alps as work-from-home trends made more distant towns popular.

Overall, the most expensive market is Engadin and St Moritz in the Grisons region in Switzerland’s South-East. There, holiday home investors have to pay around 20,500 francs ($22,700) per square meter.

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