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Swiss National Bank President Martin Schlegel has stated that the bank's equity is currently insufficient to cover the risks associated with its large balance sheet. He emphasized the need to prioritize strengthening the central bank's capital base over profit distribution to the government and cantons.
The Swiss property market remains robust, with house prices rising by 3.8% over the past year and 8.9% over two years, contrasting sharply with declines in Germany and France. Interest rate cuts have made financing cheaper, fueling demand, particularly for holiday apartments in mountain regions, where prices surged by 14% last year. However, the ongoing housing shortage poses challenges for locals and seasonal workers, as rental prices continue to outpace wages.
The Swiss real estate market is experiencing renewed momentum, driven by high net migration and a robust economy, leading to increased demand for yield properties. Institutional investors are returning as low interest rates and rising rental income enhance return expectations, despite challenges in new housing development due to high land prices and regulations. In mountain regions, housing shortages are acute, with second home prices soaring, exacerbating the plight of locals and seasonal workers.
Investment themes for 2025 are expected to revolve around interest rate cuts, currency dynamics, and geopolitical risks, as highlighted by leading economists in Switzerland. The Swiss National Bank's ongoing rate-cutting cycle could stimulate economic growth and the real estate market, while also impacting foreign currency investments. As the SNB marks a decade since abandoning its minimum exchange rate policy, the EUR/CHF exchange rate trends closer to 0.90 CHF, emphasizing the importance of the SNB's monetary policy in investment decisions.
Ticino faces financial uncertainty as rumors of a record loss at the Swiss National Bank threaten the 28 million francs budgeted for the canton. Political leaders express concern over the reliability of the budget and call for urgent structural measures to address escalating spending, warning of difficult years ahead.
Real estate prices in Switzerland and the canton of Thurgau are on the rise, with a 2% increase over the past six months and a year-on-year growth of 4.5% in Thurgau. The Swiss National Bank's recent interest rate cuts have made mortgage loans cheaper, fueling demand amid strong population growth. Notably, the Kreuzlingen district has seen a remarkable 5.6% increase in home prices over the past year.
Swiss residential property prices continued their upward trend in Q3, rising 1.7% year-over-year and 0.5% since mid-year, fueled by declining mortgage rates and anticipated cuts from the Swiss National Bank. Condominiums saw a price increase of 0.7%, outpacing single-family homes at 0.3%. Notably, medium-sized urban municipalities experienced the most significant growth, while rural areas faced declines. By the end of September, the Swiss Residential Property Price Index reached 118.2 points, with a baseline of 100 set in Q4 2019.
Swiss inflation unexpectedly slowed to its weakest level since mid-2021, with consumer prices rising just 0.6% year-on-year in October, according to the statistics office. This figure fell short of the 0.8% forecasted by economists, raising concerns about the central bank's ability to meet its inflation targets and bolstering the case for potential rate cuts by the Swiss National Bank.
The Swiss National Bank (SNB) reported a profit of 62.48 billion francs in the first nine months of 2023, a significant increase from the previous year's 2 billion. However, Ticino faces a budget deficit of 79.5 million francs, with any potential SNB payouts unlikely to resolve the canton’s structural deficit issues. The profit distribution agreement will expire in 2025, necessitating renegotiation with the federal government.
On October 31, 2024, a survey revealed that 94% of women in the Swiss Armed Forces have faced sexualized violence, prompting army leadership to implement 16 protective measures. Meanwhile, the Swiss National Bank reported a profit of CHF 62.5 billion for the first three quarters of the year, driven by strong stock market performance and rising gold prices. In other news, Spain faces further severe weather following deadly floods, while Germany has closed Iranian consulates in response to the execution of a dual national.
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