switzerland property market in a boom not a bubble
News Posted On: 31 May 2011
According to the UBS Swiss Real Estate Bubble Index, while the Switzerland property market is clearly booming, a bubble is not being formed.
The index, which was launched by UBS Wealth Management Research Switzerland, indicates that a bubble could be forming when it goes above 1. The index showed 0.63 in the first quarter of this year. To quantify this; the index went up to 2.5 in the early nineties, which is when the Swiss property market was at the height of its last bubble said UBS.
UBS said the most risky regions were Zurich, Geneva and Lausanne.
The only time that we can definitively say that a bubble has formed is when it has popped, but Swiss house prices have doubled in a decade in many areas across the country.
"Real estate bubbles pose a substantial risk for national economies, as countries like the United States, Spain, Ireland and others have recently experienced. Strong increases in home prices in Switzerland are giving cause for concern," UBS said.
"Is a real estate bubble developing in Switzerland, too? There is no simple answer to this question," UBS said.
The Swiss National Bank is "keeping a close eye" on the mortgage and the housing market, and also warned that banks could be tempted to loosen their lending standards because of low interest rates, which could trigger a house price bubble.
We know that the Switzerland property market didn't experience a crash when nearly all the rest of Europe's did. But for some, this is only a bigger worry that its turn could be yet to come.
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