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Starker Franken und tiefe Zinsen: Wohin steuert der schweizerische Immobilienmarkt?

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Abstract

The European sovereign debt crisis has put Swiss monetary policy in situation with a strong currency and ultra-low interest rates. After the Swiss National Bank (SNB) abandoned the minimum exchange rate regime, the Swiss franc has further appreciated and interest rates declined partly into negative territory. Will low interest rates fuel a housing boom, or will the dampening impact of the appreciation on economic activity have the opposite effect? The present study assesses this question on basis of a stock-flow model of the housing market. In principal, this model allows for the possibility of a boom-bust cycle in that increasing housing demand and optimistic price expectations interact in a self-enforcing process, until an excessive price level initiates a downward spiral. The econometric analysis supports this view but also shows that the turnaround takes place smoothly. Hence, a crash on the housing market can only occur in combination with an abrupt interest rate hike. Such a situation could materialize if the problems in the Euro area ebb away quickly, giving rise to a pronounced weakening of the Swiss franc. Such a development is unlikely, though. In a plausible forecast scenario, the SNB raises interest rates cautiously, steering the housing market to a soft landing.

Suggested Citation

  • Peter Stalder, 2015. "Starker Franken und tiefe Zinsen: Wohin steuert der schweizerische Immobilienmarkt?," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 9(4), pages 45-66, December.
    • Handle: RePEc:kof:anskof:v:9:y:2015:i:4:p:45-66
    DOI: 10.3929/ethz-a-005427569
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    References listed on IDEAS

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    More about this item

    Keywords

    Monetary Policy; Housing Bubble; Stock-Flow Dynamics;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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