Warning of property crash


There are growing warnings the country’s property market is heading for a crash. Experts say the current high prices are simply unsustainable.

Housing prices have been climbing for years and in this current era of negative interest rates, investors are looking at property for returns.

Analysts says the biggest culprits are pension funds which are paying 70 times the annual rent to buy – 25 is thought to be a generally good rule. It’s a price no bank would ever pay, say the experts. 

The warnings have been around for a while, the organisation Economiesuisse recently issued a report which says it believes the market is set for a sudden correction.

Bur private owners need to be concerned. Under mortgage rules, owners cannot be more than 80% indebted. So, if a home as bought for CHF 700,000 – the buyer would have taken a loan of CHF 550,000. But if the price falls to under 80% of the original price, the homeowner has to pay the bank a lump sum to bring the ratio back into line.

That could be tens of thousands. 

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