Swiss home prices surge as record-low rates spark risk of bubble

Switzerland’s push to tame its soaring currency may worsen a jump in home prices as record-low interest rates lure buyers into a market already surging from increasing immigration.

A rise in real-estate prices is among the greatest threats to Switzerland’s economy, Swiss National Bank Chairman Philipp Hildebrand said in June. He made the remarks less than two months before the bank lowered rates to zero, after warning more than a year ago about the possibility of a bubble.

“As interest rates have fallen, many people who could not afford it before can buy a house,” Alexandre Ziegler, an assistant professor of finance at the University of Zurich, said. “This has fueled demand and house prices, and could eventually result in a real-estate bubble.”

Source: Bloomberg