Swiss housing market moved closer to bubble territory in first quarter: UBS
Amid cheap credit, Switzerland is experiencing its biggest rise in home prices in 20 years
Risks to Switzerland's housing market increased further in the first three months of the year, raising the question as to whether authorities have taken sufficient steps to prevent the bursting of a bubble.
The UBS Swiss Real Estate Bubble Index rose to 1.17 points in the first quarter, from 1.11 points in the three months to December. A reading above 2 would indicate a bubble.
"The risks in the real estate market have continued to rise," said UBS analysts Matthias Holzhey and Claudio Saputelli.
With the central bank easing policy to take pressure off the franc, Switzerland is in the throes of the biggest rise in real estate prices in 20 years. The Swiss National Bank (SNB) has held its benchmark interest rate at zero since August 2011 and in September of that year capped the franc at 1.20 per euro to shield the economy from the crisis in the neighbouring euro region.
Cheap credit has buttressed property demand. High immigration has also kept demand for housing strong.
The housing markets in Lucerne, Innerschwyz and Glattal-Furttal near Zurich are now among those deemed most risky, in addition to the commercial centres of Zurich, Geneva and Lausanne, the analysts said.