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View Poll Results: How long will the CHF peg hold?
Less than a day 1 0.64%
Less than a week 17 10.90%
Less than a month 24 15.38%
Until the end of the year 43 27.56%
Longer 71 45.51%
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  #761  
Old 15.01.2015, 16:32
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Re: SNB Pegs CHF to the EUR!!!

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I don't have a house, so I don't have to worry about that
But I bet Swiss Real Estate funds will be down too today

Doesn't take a genius to figure this out, currency value goes up, everything priced in that currency goes down. Simples!
Probably. But I doubt it will be to the extent of the CH stock market though as a lot of demand is domestic. Reading the article linked though, it sounds that the polish real estate market will fair far worse.

https://uk.finance.yahoo.com/news/po...133538560.html
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  #762  
Old 15.01.2015, 16:34
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I don't have a house, so I don't have to worry about that
But I bet Swiss Real Estate funds will be down too today

Doesn't take a genius to figure this out, currency value goes up, everything priced in that currency goes down. Simples!
Not necessarily.

The companies that are hardest hit are those trading in EUR countries as their assets and income in those countries are suddenly lessened in value.

Companies both producing and selling in CH should not have suffered tzo teh same extent.

Real estate prices in CH (if we exclude that sector of the real estate market that caters to people whose income is outside of Switzerland) is determined by the income situation of people living and working inside CH, which is not likely to change quickly.

So maybe villas for German millionaires have suddenly lost 10% of their value. But average appartments shouldn't have suffered at all.

A currency value does not go up or down. It only goes up or down in comparison to something else. Did the collpase of the Zimbabwe Dollar hurt the Swiss real estate market?

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I bet Konstanz is a mess this Saturday!
Consumption is rarely a good investment strategy.

Last edited by 3Wishes; 15.01.2015 at 17:29. Reason: merging successive posts
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  #763  
Old 15.01.2015, 16:37
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Re: SNB Pegs CHF to the EUR!!!

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at least now they will be getting more EUR for each CHF instead of shortchanging themselves and every CHF holder as they have been doing for the last 3 years...
True, but the SNB will book huge losses this quarter if exchange rates stay roughly where they are now. CHF is down by about 15%, if they still had those 500bln foreign values on their books they just created about 70bln losses for themselves, which roughly equals equity.
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  #764  
Old 15.01.2015, 16:42
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Re: SNB Pegs CHF to the EUR!!!

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A currency value does not go up or down. It only goes up or down in comparison to something else. Did the collpase of the Zimbabwe Dollar hurt the Swiss real estate market?
You can keep burying your head in the sand all you want.

The Zimbabwe Dollar didn't hurt the Swiss real estate but the value of Real Estate in Zimbabwe exploded in Zimbabwean Dollar terms.

Same goes for Swiss Real Estate prices, if you have CHF1.2M valued property it's now worth more in other currencies (EUR200k more for example) than it used to yesterday. Problem is the property is still the same, and people realise that their Swissies go further in surrounding countries, so they are hesitant to pay the same prices, this generates deflationary pressure on everything locally.

Don't just take my word for it, wait and see!
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  #765  
Old 15.01.2015, 16:49
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Re: SNB Pegs CHF to the EUR!!!

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Not necessarily.

The companies that are hardest hit are those trading in EUR countries as their assets and income in those countries are suddenly lessened in value.

Companies both producing and selling in CH should not have suffered tzo teh same extent.

Real estate prices in CH (if we exclude that sector of the real estate market that caters to people whose income is outside of Switzerland) is determined by the income situation of people living and working inside CH, which is not likely to change quickly.

So maybe villas for German millionaires have suddenly lost 10% of their value. But average appartments shouldn't have suffered at all.

A currency value does not go up or down. It only goes up or down in comparison to something else. Did the collpase of the Zimbabwe Dollar hurt the Swiss real estate market?
About "So maybe villas for German millionaires have suddenly lost 10% of their value. " Surely gained 10%; if the millionaire sold now he would get 10% more in euro (plus/minus), assuming same in CHF.
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  #766  
Old 15.01.2015, 16:50
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You can keep burying your head in the sand all you want.

The Zimbabwe Dollar didn't hurt the Swiss real estate but the value of Real Estate in Zimbabwe exploded in Zimbabwean Dollar terms.

Same goes for Swiss Real Estate prices, if you have CHF1.2M valued property it's now worth more in other currencies (EUR200k more for example) than it used to yesterday. Problem is the property is still the same, and people realise that their Swissies go further in surrounding countries, so they are hesitant to pay the same prices, this generates deflationary pressure on everything locally.

Don't just take my word for it, wait and see!
If the meter were redefined at 90cm, my appartment would have more square meters, but it wouldn't be bigger.

This is the difference between nominal price and real value.

If you don't believe me, go out and buy all the houses you can afford and we'll talk again in 1 year.

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About "So maybe villas for German millionaires have suddenly lost 10% of their value. " Surely gained 10%; if the millionaire sold now he would get 10% more in euro (plus/minus), assuming same in CHF.
Only if there is another millionaire out there who hasn't been following the news. Otherwise, with the purchasing power of Germans as measured in CHF down 10%, the market cannot sustain yesterday's real estate prices.

Last edited by 3Wishes; 15.01.2015 at 17:30. Reason: merging successive posts
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  #767  
Old 15.01.2015, 16:55
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Re: SNB Pegs CHF to the EUR!!!

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About "So maybe villas for German millionaires have suddenly lost 10% of their value. " Surely gained 10%; if the millionaire sold now he would get 10% more in euro (plus/minus), assuming same in CHF.
He's saying that these Villas are only bought by foreigners so for them the price in Swiss Francs is irrelevant.

So the German guy bought it for EUR1M, he now only needs to find a buyer for EUR1M to cash out even though this is 16.6% lower in CHF terms, in EUR terms it's the same.

The point is, the locals are not stupid, and the drop in prices in these holiday homes is always the first in the chain, if a holiday home has fallen by 16.6% in CHF terms, the people buying property get spooked and hold off buying which could create a downward spiral forcing sellers to be more aggressive with their pricing... meaning the whole Real Estate market corrects.
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  #768  
Old 15.01.2015, 16:58
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Re: SNB Pegs CHF to the EUR!!!

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He's saying that these Villas are only bought be foreigners so for them the price in Swiss Francs is irrelevant.

So the German guy bought it for EUR1M, he now only needs to find a buyer for EUR1M to cash out even though this is 16.6% lower in CHF terms, in EUR terms it's the same.

The point is, the locals are not stupid, and the drop in prices in these holiday homes is always the first in the chain, if a holiday homw has fallen by 16.6% in CHF terms, the people buying property get spooked and hold off buying which could create a downward spiral forcing sellers to be more aggressive with their pricing... meaning the whole Real Estate market corrects.
About "the drop in prices in these holiday homes is always the first in the chain" except there is a new law here about building second homes which also creates an artificial market?

Also I do not see the Russians selling out for the Ruble equivalent of what they paid!
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  #769  
Old 15.01.2015, 16:59
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Re: SNB Pegs CHF to the EUR!!!

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He's saying that these Villas are only bought be foreigners so for them the price in Swiss Francs is irrelevant.

So the German guy bought it for EUR1M, he now only needs to find a buyer for EUR1M to cash out even though this is 16.6% lower in CHF terms, in EUR terms it's the same.

The point is, the locals are not stupid, and the drop in prices in these holiday homes is always the first in the chain, if a holiday homw has fallen by 16.6% in CHF terms, the people buying property get spooked and hold off buying which could create a downward spiral forcing sellers to be more aggressive with their pricing... meaning the whole Real Estate market corrects.
Especially when bank's start making cash calls on mortgages.
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Old 15.01.2015, 16:59
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Re: SNB Pegs CHF to the EUR!!!

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If the meter were redefined at 90cm, my appartment would have more square meters, but it wouldn't be bigger.

This is the difference between nominal price and real value.

If you don't believe me, go out and buy all the houses you can afford and we'll talk again in 1 year.
I think you're getting yourself confused old friend

I never said the real value has changed, I'm just saying the nominal price has changed because the currency has appreciated by 16.67%, therefore the nominal price has to fall.

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Especially when bank's start making cash calls on mortgages.
Oh yeh! Forgot about that!
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  #771  
Old 15.01.2015, 17:02
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Re: SNB Pegs CHF to the EUR!!!

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The point is, the locals are not stupid, and the drop in prices in these holiday homes is always the first in the chain, if a holiday homw has fallen by 16.6% in CHF terms, the people buying property get spooked and hold off buying which could create a downward spiral forcing sellers to be more aggressive with their pricing... meaning the whole Real Estate market corrects.
Maybe, but the holiday home market and the residential market are not the same. Neither the supply not the demand demographic have very much overlap. With the laws making it difficult for foreigners to own holiday homes, the holiday regions have already possibly shot themsleves in the foot. But the potential collapse in the market for luxury appartments in Saas Fee is going to have little effect on the value of a lower-middle class appartement on the 3rd floor in Kreis 5, if not by a very roundabout mechanism and taking some time to manifest itself. Irrational reactions cause overswings in the market but the plateau that eventually follows is caused by rational equilibroim.
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  #772  
Old 15.01.2015, 17:03
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Re: SNB Pegs CHF to the EUR!!!

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I never said the real value has changed, I'm just saying the nominal price has changed because the currency has appreciated by 16.67%, therefore the nominal price has to fall.
Surely that would only be the case if the majority of owners were earning in, or converting cash from, Euros to buy Swiss property?

Edit: I see in another post you're now talking about Holiday homes, which of course is a different kettle of worms entirely. And while there may be some knock-on effect to the residential market from a drop in holiday home prices I doubt it will be very significant.
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  #773  
Old 15.01.2015, 17:05
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Re: SNB Pegs CHF to the EUR!!!

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Surely that would only be the case if the majority of owners were earning in, or converting cash from, Euros to buy Swiss property?
Not really, people look at overall value. If you notice the Swiss often shop in Germany as it's cheaper, it's the same principle.
It's also quite possible that Swiss salaries will fall as well.

If Banks decide to tighten lending criteria, possibly wanting a 35% deposit, which is hardly a foolish concept from their point of view.
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  #774  
Old 15.01.2015, 17:07
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Re: SNB Pegs CHF to the EUR!!!

Are ATMs giving out Euro today at the current rate ?

Or are all bets off til tomorrow to wipe the floors up first ?
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  #775  
Old 15.01.2015, 17:08
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Re: SNB Pegs CHF to the EUR!!!

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Surely that would only be the case if the majority of owners were earning in, or converting cash from, Euros to buy Swiss property?
Like I said before Currency appreciates, everything goes down in nominal value in that currency.

This is a massive blow to Swiss businesses specially in the tourism industry and exporters. Who's gonna buy a EUR70 Ski Pass? and EUR12 bottle of water? and EUR9 Goulash Suppe?
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  #776  
Old 15.01.2015, 17:10
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Re: SNB Pegs CHF to the EUR!!!

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Not really, people look at overall value. If you notice the Swiss often shop in Germany as it's cheaper, it's the same principle.
It's also quite possible that Swiss salaries will fall as well.

If Banks decide to tighten lending criteria, possibly wanting a 35% deposit, which is hardly a foolish concept from their point of view.
Yes, I think a fall in salaries is a possible long-term scenario within the context of overall deflation. Prices in shops are likely to drop both in reaction to people shopping abroad and to imports getting cheaper. That will soften the effects of starter salaries being lowered and maybe even existing salaries being cut or at least raises being frozen as companies seek to become more competitive.
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  #777  
Old 15.01.2015, 17:12
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Re: SNB Pegs CHF to the EUR!!!

Did something happen today ?
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Old 15.01.2015, 17:13
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Re: SNB Pegs CHF to the EUR!!!

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Yes, I think a fall in salaries is a possible long-term scenario within the context of overall deflation. Prices in shops are likely to drop both in reaction to people shopping abroad and to imports getting cheaper. That will soften the effects of starter salaries being lowered and maybe even existing salaries being cut or at least raises being frozen as companies seek to become more competitive.
Swiss salaries for contractors have fallen 30-50% since 2000, employees have faired better so far but could be in for a short sharp shock.
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  #779  
Old 15.01.2015, 17:17
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Re: SNB Pegs CHF to the EUR!!!

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Did something happen today ?
Nope! Nothing to see here!

Just the usual Friday Thursday thread...
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  #780  
Old 15.01.2015, 17:30
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Swiss National Bank Shocks the World

No more 1.2chf per eur.

Some comments on Bloomberg:
http://www.bloomberg.com/news/2015-0...osit-rate.html
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