UBS real estate bubble index rises
The UBS Swiss Real Estate Bubble Index rose significantly in the second quarter of 2015 and currently stands at 1.37 index points. Compared with the previous quarter, the index thus rose by 0.10 points within the risk zone, which is the strongest index increase since the fourth quarter of 2012, according to UBS.
The mortgage volume of private households increased by around 3.5 percent compared to the previous year, while home prices rose by just under two percent in nominal terms. Although such growth rates would appear rather moderate in a historical comparison, they are comparatively high in view of the shrinking economic output and significantly falling consumer prices, write the UBS researchers. At the same time, the trend toward a flattening of debt and price dynamics, which had been ongoing since the beginning of 2014, was halted in the past half-year.
The purchase-to-rent ratio also increased slightly again in the past quarter. This is because while prices for owner-occupied apartments rose, rental price development continued to flatten out. Rents for new buildings fell by three percent year-on-year.
According to UBS, the rise in the index confirms that the all-clear cannot be given on the owner-occupied housing market for a long time yet. On the one hand, the demand for their own four walls due to the favorable mortgage rates continues to be very high, on the other hand, the investment demand for real estate has also received a high weight in the owner-occupied housing market. However, UBS researchers believe that home price growth rates will resume their downward trend in the second half of 2015, in line with the economic situation. (ah)
