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Real Estate Bubble Index unchanged

Zurich Media Switzerland

The Real Estate Bubble Index remained unchanged in the second quarter compared to the previous one. Improving economic conditions and the slight fall in inflation-adjusted prices for owner-occupied homes helped stabilize imbalances. Geneva and Nyon no longer count as exposed regions.

Zurich, 08 August 2017 – At 1.38 points, the UBS Swiss Real Estate Bubble Index was in the risk zone in the second quarter of 2017. The index thus remained unchanged compared to the value of the previous quarter. The imbalances on the owner-occupied housing market have not increased any further for several quarters.

The Real Estate Bubble Index was propped up by the Buy-Rent Price Indicator, which reached another high in the second quarter of 2017. Investment demand for residential real estate also remained high. However, a dampening effect was created by the relatively moderate growth in outstanding household mortgages against the backdrop of slightly brighter economic conditions. In a quarter-on-quarter comparison, a slight drop in inflation-adjusted prices of owner-occupied homes was also observed for the second time in row.

Increasing imbalance between the rental and owner-occupied housing markets

Since 2014, the purchase prices for residential property have increased at a greater rate than market rents. This gap between the owner-occupied housing and the residential rental market expanded further in the second quarter of 2017. However, this was due less to a boom on the owner-occupied housing market and more to a continuing decline in rents. Market rents for new rentals and continued rentals are now below the level at the start of 2014.

From a macroeconomic perspective, the past quarter was characterized by improving economic data and the weakening Swiss franc trend. However, construction investments were unable to keep pace with the faster economic development. The construction industry's share of overall economic performance was therefore slightly down. Nevertheless, building permits do not indicate a future decline in residential construction activity. For the year as a whole, the UBS Chief Investment Office Wealth Management still expects new construction activity to be excessive compared to demand, amounting to around 50,000 residential units. This means that rents should continue to fall.

Market risks reduced at Lake Geneva

The economic regions of Geneva and Nyon no longer count as risk regions following a price correction of around 10% in the last three years. On a 10-year average too, the rate of price increases now lies beneath the median value of all Swiss economic regions. Zurich Oberland, on the other hand, is now a risk region (again). This confirms the trend for the concentration of risks on the owner-occupied housing market in the regions of Zurich and Central Switzerland.

UBS Swiss Real Estate Bubble Index – 2Q/2017

Selecting exposed regions

The regional risk map shows those regions posing the greatest macroeconomic risks in the event of a Swiss-wide correction. The analysis is based on the population size, the price level and the price behavior for owner-occupied homes. The selection of risk regions is linked to the UBS Swiss Real Estate Bubble Index. Vacancy or liquidity risks are not taken into account.

Regional risk map – 2Q 2017

Risk regions for the Swiss residential property market and regions with a price correction of more than 5 percent since 2014

UBS Switzerland AG


Claudio Saputelli, Head Swiss & Global Real Estate, Chief Investment Office WM
Phone +41-79-513 50 45

Dr. Matthias Holzhey, Head Swiss Real Estate Investments, Chief Investment Office WM
Phone +41-44-234 71 25

The UBS Swiss Real Estate Bubble Index report is available on the Internet via this link:

The index is published on a quarterly basis. The next date of publication for the UBS Swiss Real Estate Bubble Index is 3 November 2017.