Zurich has become one of Europe’s hottest housing markets, with prices surging past London and Paris and showing how local shortages can offset interest rate hikes.

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With demand in the Swiss financial hub stoked by hiring from companies including Google, apartments in the central Zurich district are being listed at near record levels of over €18,000 ($19,000) per square meter, more than double London, according to data compiled by Bloomberg.

Even when widened out to the Zurich canton, which includes some remote mountain villages but also homes for many commuters, asking prices are almost at the level of Paris. Those prices rose 5.8% in August from a year earlier — the biggest increase in 16 months.

Currently more than 5,000 people from 85 countries work for Google in Zurich.Photographer: Pascal Mora/Bloomberg

While Paris, Vienna and Berlin posted year-on-year declines in their latest monthly figures, prices in the bulk of markets monitored by the Bloomberg City Tracker are still rising — albeit trends have slowed or flattened.

The increases suggest consumers might be gradually adjusting to higher interest rates, as tight housing markets help keep a floor under prices. But it takes time for central bank rate hikes to work through the system, and conditions are finely balanced with consumers already squeezed by inflation and valuations high.

Month-on-month trends show that listing prices were mostly weaker across the nine cities tracked by Bloomberg, though activity is typically slow during the summer months. To capture the latest housing-market trends in European cities, Bloomberg compiles figures from a range of providers. Some are asking rates and indicative levels, while others are official figures on transactions.

Despite Sweden’s property crisis, prices in Stockholm — where there’s a dearth of rental options — rose 4.3% from a year ago. Madrid and Milan, which had less of a boom during the cheap-money era, posted increases of more than 3%. Price gains in all three cities were slower than in previous months.

Zurich though is a clear outlier. UBS Group AG, which is based in the city, ranked it as having the highest risk in the world of suffering a real estate bubble.

Homes in the Swiss city cost over 50% more than a decade ago. An increasing number of high-income earners have helped lift prices, which haven’t yet adapted to higher interest rates, the bank said Wednesday in a report.

Increasing demand from immigration is colliding with constrained supply and offsetting higher interest rates, and the trend is unlikely to change soon, according to Alexander Koch, an economist at Raiffeisen Switzerland.

“We have low supply, but at the same time we have increasing demand due to employment growth and immigration,” he said. “Real estate issues are always very difficult in politics and implementation usually takes many years.”

The rapid pace of growth in the Swiss property market has raised concerns at the central bank. While momentum has cooled recently, the Swiss National Bank said Thursday that “vulnerabilities” remain.

Located between mountains and a large lake, Zurich has natural limits to how much housing it can offer. But high salaries and the beautiful surroundings is a big draw for people from around the world. About one-third of the city’s nearly 450,000 residents are foreigners.

While financial services are a traditional strength — accounting for one in 10 jobs in the area — Alphabet Inc.’s Google has become one of the biggest local employers. Currently more than 5,000 people from 85 countries work for the tech giant in Zurich, which has three campuses in the city. A fourth is due to open later this year near an existing location in the trendy district not far from the famous red-light Langstrasse.

That type of growth is more than offsetting concerns over job cuts from UBS’s takeover of Credit Suisse, which are expected to take place gradually.

Corporate settlement has been encouraged in Switzerland since 1998, which ushered in tax privileges for holding companies and expats. But now concerns are growing that it’s gone too far.

About 8.9 million currently live in Switzerland, an increase of almost 10% over the last decade, and limiting the country’s growth has become a key issue ahead of elections on Oct. 22.

The conservative Swiss People’s Party — which is set to increase its lead — is pushing for a vote to change the constitution to not let the population exceed 10 million people until 2050 by limiting asylum rights. The left-leaning Social Democratic Party names company settlement as the problem.

Read More: Rich Norwegians Flee Fjords for Swiss Exile in Rage About Taxes

In a survey conducted in 2022, 37% of migrants cited professional reasons and only 6% cited seeking asylum as the main reason for settling in Switzerland.

To help regular folks live off their paychecks, Zurich earlier this year implemented a minimum wage of 23.90 Swiss francs per hour, which equates to a monthly full-time salary of roughly 4,000 francs ($4,500) — 80% more than the minimum living wage in the City of London. Google, meanwhile, pays entry-level software developers as much as 200,000 francs a year.

Swiss interest rates are much lower than in the euro zone.Photographer: Stefan Wermuth/Bloomberg

On top of the generous salaries, Switzerland also has a noticeable advantage in financing costs compared with its neighbors. The SNB unexpectedly left its key rate at 1.75% on Thursday, less than half the European Central Bank’s 4%. And while local banks often require deposits of at least 20%, mortgages can sometimes extend beyond 50 years, easing repayment burdens.

With all that money sloshing around, prices have surged to unprecedented levels. For example, a 50-square-meter loft apartment with a bedroom in a mezzanine is listed for almost $1 million. One of its key selling points: it’s about a 15-minute bike ride from Google offices.

“For every manager who immigrates, there are an estimated 10 others who provide services in the surrounding area; that’s how this immigration comes about,” Jacqueline Badran, a social democratic member of Switzerland’s parliament, told the Neue Zürcher Zeitung earlier this month. “In this respect, our business model of a low-tax country has actually worked, with all the unpleasant consequences.”