Is There A Real Estate Bubble in Switzerland? (Diagnostic as of 2012-Q4)

Diego Ardila, Peter Cauwels, Dorsa Sanadgol and Didier Sornette
Additional contact information
Diego Ardila: ETH Zurich
Peter Cauwels: ETH Zurich; Director Quaerens CommV
Dorsa Sanadgol: ETH Zurich
Didier Sornette: ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute

No 13-07, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We have analyzed the risks of possible development of bubbles in Switzerland’s residential real estate market. The data employed in this work has been collected by comparis.ch, and carefully cleaned from duplicate records through a procedure based on supervised machine learning methods. The study uses the log periodic power law (LPPL) bubble model to analyze the development of asking prices of residential properties in all Swiss districts between 2005 and 2013. The results suggest that there are 11 critical districts that exhibit signatures of bubbles, and seven districts where bubbles have already burst. Despite these strong signatures, it is argued that, based on the current economic environment, a soft landing rather than a severe crash is expected.

Keywords: real estate bubble; Switzerland; interest rates; positive feedbacks; log-periodic power law; Comparis; Internet; supervised machine learning (search for similar items in EconPapers)
JEL-codes: C60 C80 G01 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2013-03
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1307

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