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Risk of a real-estate bubble in Switzerland grew in first quarter

The risk of a property bubble increased in the first quarter
The UBS Swiss Real Estate Bubble Index has risen to 0.29 points, compared with 0.25 points previously, indicating that the risk of a property bubble is considered "moderate", said UBS. Keystone-SDA

The risk of a bubble in the Swiss property market increased slightly in the first three months of the year compared with the previous quarter, according to UBS. However, this risk is more moderate for owner-occupied housing.

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The UBS Swiss Real Estate Bubble Index has risen to 0.29 points, compared with 0.25 points previously, indicating that the risk of a property bubble is considered “moderate”, said the major bank in a report published on Thursday.

A correction in property prices would therefore be unlikely, said the authors, who point to moderate mortgage demand and a construction sector that is still slowing.

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Buying a house in Switzerland is getting more expensive, +4% in one year

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Swiss house prices rise 4% in a year

This content was published on The cost of buying a home in Switzerland rose by 4.1% year-on-year in the last quarter and by 0.7% compared to the previous three months.

Read more: Swiss house prices rise 4% in a year

Prices of owner-occupied homes rose by 1.5% compared with the previous quarter. Year-on-year, they rose by 3.2% in nominal terms, or 2.8% in real terms. Rental property prices rose by 2.2% and 3.2%, respectively, year-on-year.

UBS predicts that the Swiss National Bank’s (SNB) cut in key interest rates in March should slow this rise over the coming quarters. Also, “uncertainty about employment and income is likely to have a negative effect on demand for owner-occupied homes”, prices for which are expected to rise by between 3% and 4% this year.

Translated from French with DeepL/gw

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