UBS: Real estate bubble index falls significantly
The UBS Swiss Real Estate Bubble Index fell sharply in the first quarter of 2018, from 1.32 points in the fourth quarter of 2017 to 1.10 points now. However, it still remains in the risk zone.
According to UBS, the real estate bubble index has fallen for the third time in a row. Although the strengthening economy has supported demand for residential property, slightly rising mortgage rates and the intensifying competition with vacant rental apartments, among other things, have prevented higher prices, according to UBS researchers.
According to the survey, single-family houses increased in price slightly by 0.1 percent compared with the previous quarter, but prices for condominiums fell by 0.9 percent. Compared with the previous year, purchase prices for condominiums actually fell by two percent - the sharpest decline since 1998.
Meanwhile, UBS researchers noted unchanged high demand for buy-to-let investments, and the ratio of purchase and rental prices points to a "persistently unhealthy high interest rate dependence of the owner-occupied housing market," they write further.
The decline in the real estate bubble index is also reflected regionally: The regions of Lucerne and Zurich Oberland are no longer among the danger regions. The highest price increase rates in the risk regions are currently recorded in Basel-Stadt, where the price level is 15 percent higher than in 2015.
