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Swiss negative rates make homes unaffordable: report


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.

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

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