Switzerland’s decision to enforce immigration quotas for European Union countries could help to slow the country’s rapidly rising property prices, according to a report released by one of the nation’s largest banks.
“Due to lower immigration in the coming years, we expect more moderate price increases in the Swiss property market,” said Zuercher Kantonalbank’s (ZKB) Chief Economist Anastassios Frangulidis in the recent report.
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Driven by the cheap financing available after the Swiss National Bank trimmed its interest rate to near zero in August 2011, property prices in Switzerland have been climbing at record rates over the past 18 months.
Earlier this year, the Swiss government ordered all banks and mortgage lenders which have dealings in the country to hold an additional 1 per cent of mortgage-related risk weighted assets to underpin their lending in a bid to slow the market.
However, it appears that April’s decision to limit EU immigration for the foreseeable future, will also be a major factor in bringing the booming property market back under control.
The ZKB report, released yesterday, predicted that reduced immigration will cut the rise in Zurich apartment prices to roughly 3.5 per cent this year and 3 per cent in 2014, significantly down from the 7.2 per cent price increase seen in 2012.