If the SNB interest rate is -0.75% and the bank lends at +0.75% then it ends up with a 1.5% margin, exactly as you say.
The bank doesn't care what the inflation is because well, it gets its margin, and it didn't have the capital in the first place.

Only if the return is to stay the same. In today's environment the price can increase if rent is flat because buyers keep accepting lower returns (including the imputed return one's hypothetical rent represents).

This is pretty much what's happening.

The (grand)parent generation fuels this by not moving to a smaller dwelling once the children have flown off. Probably the large majority of the grandparents who still live "independently" (i.e. outside of care homes etc) live in what used to be the family home. What may have equaled 20-30sqm per person back then is 60sqm or even 120 today, so the children need a new build when they start their own family rather than the existing homes being handed down to the next generation. I bet Kittster's neighbors reflect this pattern completely, too. My Mom lives alone in what used to be a 7-people dwelling, it's her home.

It isn't canton Zug, it's nearby. And these people are not trying to get on the property ladder, they are looking for their forever home. The concept of the property ladder is not really a thing in Switzerland (or at least not to native Swiss people), that applies to countries where buying and reselling a house a few times in a lifetime is normal. I don't know anyone personally who had done that here.