My friends in Geneva tell me that this has been a thing there for a long time. It has some pretty bizarre effects on the market (according to my friends):
1. House prices rise to the point where the down payment is essentially the price of the house. The house price itself becomes imaginary. What you are really worried about is the down payment.
2. Since house prices are now super high, only people who have saved up a big down payment can actually buy a house.
3. Banks turn away borrowers because they end up with too many loans on their books and no real incentive to get more.
I would be interested to hear from people with more direct experience on how this plays out.
1. House prices rise to the point where the down payment is essentially the price of the house. The house price itself becomes imaginary. What you are really worried about is the down payment.
2. Since house prices are now super high, only people who have saved up a big down payment can actually buy a house.
3. Banks turn away borrowers because they end up with too many loans on their books and no real incentive to get more.
I would be interested to hear from people with more direct experience on how this plays out.