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Swiss negative rates make homes unaffordable: report

Zurich

SWITZERLAND'S negative interest rates make owning a home increasingly unaffordable in a country where a single-family property can cost more than 10 times the average annual salary, according to research by Credit Suisse Group.

Amid a declining threshold at which banks start to charge savers negative interest on cash balances, investors are looking to the property market for positive returns and low risk from buy-to-let investments, Switzerland's second-biggest bank said in a property market report on Wednesday.

"Private investors seeking secure investments are following the example of more financially powerful investors by buying up residential properties with a view to renting them out," it said. "Since multi-family dwellings are barely affordable in today's environment, there is strong demand for condominiums and, in some cases, single-family homes."

Buy-to-let financing now accounts for 17 per cent of new mortgage business and rising prices in sought-after locations are putting rental yields under pressure. Also, Switzerland's strict affordability criteria have put home ownership for the average household out of reach.

An apartment can cost more than five times the average annual income and more than seven times that for single-family homes. BLOOMBERG