Monetary policy challenges and the Swiss real estate market

Philipp Hildebrand, Chairman of the Governing Board

Journée de l’économie tessinoise, Lugano , 28.10.2010

The National Bank has been expressing concern about developments in and around the Swiss real estate market for some time. While there is currently no cause for panic, there is also no reason to sound the all-clear. With a few exceptions, rising prices in the last few years so far seem to be due to fundamentals. However, these exceptions should be seen as warning signs.

The risks we have been pointing out for some time stem primarily from mortgage lending. Interest rates are currently at a historically very low level and competitive pressure in the real estate market is high. Any signs of more lax lending practices must therefore be given full attention by all the parties concerned.

Working closely with FINMA and the banks, the SNB will keep a close watch on further developments in the real estate market. The authorities will not hesitate to take corrective measures, if necessary. In addition, complementary to monetary policy, the SNB will consider macroprudential measures. Ensuring price stability in our country remains the main focus of monetary policy.

We all bear joint responsibility. Switzerland has weathered the most serious global financial and economic crisis in post-war history better than many other countries. In spite of all the difficulties we have experienced, we find ourselves in a fairly comfortable position. It would indeed be regrettable if we were to jeopardise these favourable conditions by acting irresponsibly in the real estate market.