Swiss Housing Market a Bit More Reassuring, SNB’s Zurbruegg Says

  • Central bank vice president speaks at conference in Zurich
  • SNB using regulatory tools to temper property-market risks

The Swiss National Bank has grounds to be a “bit less worried” about the housing market, although risks remain high, Vice President Fritz Zurbruegg said.

With the central bank keeping interest rates low to prevent the Swiss franc from appreciating, officials have resorted to macroprudential measures, including a countercyclical capital buffer for banks, to address the housing sector. Growth in real estate prices weakened in the second quarter as lending volumes remained unchanged, the SNB said after its last policy assessment.

“If you look at the recent past, the dynamics have been a bit more reassuring,” with a decrease in price dynamics and decrease in mortgage volumes, Zurbruegg said at a conference in Zurich on Wednesday. Still, “let’s not forget, this disequilibrium that we have achieved remains very high.”

The SNB has a two-pillar policy consists of a deposit rate of minus 0.75 percent coupled with a pledge to intervene in currency markets to combat a franc that Zurbruegg said is still “significantly” overvalued.

Current policy is appropriate and -- looking ahead five years -- inflation expectations are stable, he said.

The housing market “is definitely an issue we’re monitoring very, very closely,” Zurbruegg said. “It’s a classical trade-off.”

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