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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Diego Ardila & Peter Cauwels & Dorsa Sanadgol & Didier Sornette, 2013. "Is There A Real Estate Bubble in Switzerland? (Diagnostic as of 2012-Q4)," Swiss Finance Institute Research Paper Series 13-07, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1307
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    Cited by:

    1. Darrell Jiajie Tay & Chung-I Chou & Sai-Ping Li & Shang You Tee & Siew Ann Cheong, 2016. "Bubbles Are Departures from Equilibrium Housing Markets: Evidence from Singapore and Taiwan," PLOS ONE, Public Library of Science, vol. 11(11), pages 1-13, November.

    More about this item

    Keywords

    real estate bubble; Switzerland; interest rates; positive feedbacks; log-periodic power law; Comparis; Internet; supervised machine learning;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • G01 - Financial Economics - - General - - - Financial Crises

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