Boom risks taking Swiss real estate off-piste

In a country that prides itself on economic stability, phrases like “too big to fail” can grab attention in Switzerland, especially when spoken by the head of the financial watchdog.

Finma’s common practice of intervening to rein in individual institutions that take on too much risk “is not enough to counteract the generalised overheating trends we are currently seeing”, Branson said. “As a result, action is needed now.” It noted that aside from banks, Swiss pension funds and insurance companies also had “significant exposure to real estate”.Rental properties in Switzerland have long been attractive investments, with purchase prices for such assets at record highs. Persistently low interest rates have helped fuel the buying spree.

In response to mounting concerns, the Swiss Bankers Association lobby group said in March it was open to amending its self-regulation of mortgage lending. Unsurprisingly for a private sector lobby group, the association stressed that “self-regulation is preferable to a state regulation”.

Source: Real Estate Daily Report (realestatedailyreport.net)

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