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A general view shows the city of Zurich, Lake Zurich and the eastern Swiss Alps.ARND WIEGMANN

The charming semi-detached house is perfect for a family: spacious with a beautiful view of the city, lake and surrounding mountains.

The problem is that very few households can afford this 200 square-metre home in Zurich, which has a rather robust asking price of 5.6 million Swiss francs ($6.39-million Canadian).

Welcome to the exorbitant world of Swiss real estate, where the median price for a family house is now 1.93 million francs in Zurich and 2.34 million francs in Geneva, according to a recent report from real-estate consultancy firm Wuest & Partner. The firm says the median price for a house across Switzerland is 780,000 francs ($887,000).

A typical sale process, even in smaller Swiss cities such as Lausanne or Winterthur, goes something like this: the real-estate agent is inundated with requests to see the house, sometimes 100 visitors within a week. There are two, maybe three rounds of bidding. The final price can jump substantially, as in the case of one house in Winterthur that recently sold for some 40 per cent above asking.

The soaring residential property prices in Switzerland's largest cities and tourist hot spots have sparked a debate about whether the country is heading towards bubble territory. Some experts believe it is merely in recovery mode still after prices after the last bubble popped in the 1990s. Indeed, Wuest & Partners is expecting growth to slow this year.

But others believe the market is clearly overheated, with one financial expert telling Swiss newspaper Tages-Anzeiger last week that properties are up to 20 per cent overpriced. In the past decade, prices for residential real estate more than doubled in many spots, according to UBS.

UBS, which recently started publishing a quarterly report called the Swiss Real Estate Bubble Index, said in August that the property market is still in a boom period rather than a bubble. But it acknowledged the "massive" rise in household mortgage debt continues and that there are a number of risk regions including Zurich and Geneva and skiing destinations like Davos. (Click here for a glimpse of the Swiss housing market).

Swiss National Bank chairman Philipp Hildebrand in June said the threat of "overheating" in the real-estate market is one of the main risks for the economy.

So why is the Swiss real-estate market so hot? One reason is that the country has weathered the global economic storm so well. Unemployment is low and the economy is humming along so people feel confident enough to go house hunting. Another reason is greater demand as more foreigners moved to Switzerland in recent years after an agreement with the European Union.

Finally, rock-bottom interest rates, currently 0 per cent, have certainly lured more buyers into the market.

Still, a buyer in Switzerland faces significant financial hurdles compared with other countries like the United States. Lenders aren't going to give a buyer all the money here. The purchasers must be able to tap their own funds to pay a 20 per cent down payment on the property.

So while the majority of Swiss dream of owning their own house, only 40 per cent actually do.