Switzerland’s central bank warns of potential housing bubble as prices keep rising

Some estimates say Switzerland’s housing market is overvalued by 30 percent

National Weekend Edition /
Sep.September 04, 2021 12:00 PM
Swiss National Bank Vice President Fritz Zurbruegg (Getty)

Swiss National Bank Vice President Fritz Zurbruegg (Getty)

Switzerland’s national bank warned of a correction in the country’s housing market as home prices keep rising.

Schweizerische Nationalbank Vice President Fritz Zurbruegg said in a speech on Tuesday that new mortgage borrowers may not be able to afford their loans if borrowing costs jump, according to Bloomberg. Low interest rates could worsen the situation by encouraging risky borrowing and lending, he said.

Zurbruegg cited signs of “unsustainable mortgage lending” as well as “risks of a price correction” and added, “the probable continuation of the current upswing on the mortgage and real estate markets means that risks to financial stability are likely to remain in the spotlight.”

By some estimates, Swiss home prices are overvalued by 30 percent, and UBS Group AG has also warned of a bubble. Also at risk of are New Zealand, Canada, Sweden, and the U.S. China last year adopted policies to slow the country’s housing market although the verdict is still out on how effective of those decisions were.

Switzerland’s housing market required the “vigilance” of authorities, Zurbruegg said.

[Bloomberg] — Dennis Lynch 





    Related Articles

    arrow_forward_ios
    Home sales dipped in August after two months of increases
    Home sales dipped in August after two months of increases
    Home sales dipped in August after two months of increases
    Builders broke ground on more residential properties in August than had been predicted, but the number of single-family housing starts fell below expectations. (iStock)
    August housing starts rose but single-family properties fell short
    August housing starts rose but single-family properties fell short
    614 Hudson Street in Hoboken, NJ (Redfin)
    19th Century townhouse in Hoboken listed for $7M
    19th Century townhouse in Hoboken listed for $7M
    First-time buyers in New York City have prime options in 4 out of the city’s 5 boroughs, according to a report from StreetEasy (iStock)
    Sheepshead Bay tops ranking of best NYC neighborhoods for first-time buyers
    Sheepshead Bay tops ranking of best NYC neighborhoods for first-time buyers
    Homebuilders are more confident in home sales than they’ve been in the last three months (Getty)
    Homebuilder sentiment rose in September, ending three-month decline
    Homebuilder sentiment rose in September, ending three-month decline
    Credit Suisse Group partners with MARK on $1B-plus rental housing fund
    Credit Suisse Group partners with MARK on $1B-plus rental housing fund
    Credit Suisse Group partners with MARK on $1B-plus rental housing fund
    Wells Fargo hit with $400M suit for breach of contract linked to robo-signing scandal
    Wells Fargo hit with $400M suit for breach of contract linked to robo-signing scandal
    Wells Fargo hit with $400M suit for breach of contract linked to robo-signing scandal
    The slowing of the housing market has squeezed the profit margins of house-flipping investors. (iStock)
    Profit margins on fixer-uppers fall to 10-year low
    Profit margins on fixer-uppers fall to 10-year low
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...