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Old 24.10.2016, 11:43
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Re: Is Zurich experiencing a housing bubble?

Yes projected interest rates and fixed rates suggest long term low interest rates, so no shocks expected to the market in the short term...

But. A lot of vacant properties (new and recent builds) on the Gold Coast of Zurich suggest at the very least a bit of an oversupply. People are starting to drop prices (real estate agents have told me the Swiss are very slow to accept that they need to drop price to sell, and the interest rate pressure to do is low as well)

The starkest oversupply seems to be up in the mountain resort towns in GR

regarding commercial real estate, commentary I have read which makes sense is the risk of a bubble is potentially elevated because of very low interest rates mean that despite very low yields in real estate (<2.5%) they are an attractive place to park money. For now. but with a very high vacancy rate in Zurich, the vacancy rate could go up, and while prices havent dropped, it makes sense they would do so, perhaps starkly, when they go to sell in an non-liquid market (one with no buyers).

In summary, I think that in Zurich any purchase in the last 3 years has been "a the top of the market" and it will either stagnate now (optimistic), or go down 3-5% in the next 5 years, so its not a great investment, but if you own and have a long term view, the mortgage is cheap, and one day it might be worth more, but I wouldn't want to guess in how long.

Prudent lending has created stability, and you aren't seeing large amounts of plainly silly investments at prices that simply don't make sense.

Last edited by alemap; 24.10.2016 at 13:03. Reason: minor typos
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