Salient to Investors:
The UBS Swiss Real Estate Bubble Index entered the risk zone for the first time since 1991.
Matthias Holzhey and Claudio Saputelli at UBS said:
- Population growth continues to favor price increases, but prices are increasingly being supported by investment demand and by low interest rates, Continued strong increase in household mortgage debt shows no signs of abatement.
- The average Swiss household income required to buy a home rose in Q3 due to a renewed increase in real estate prices and stagnating income – the 5.9 times income needed to buy is is still below the 6.8 times peak in 1990.
- Zurich, Geneva and Lausanne are most at risk from residential real- estate bubbles because of their national importance.
Holzhey expects the rise to continue next year, driven by interest rates that are too low.
50,000 people a year migrate to Switzerland, where unemployment is lower and income higher than most of Europe. The tax rate of 28.5 percent of GDP is below the OECD average of 33.8 percent.