Risks at the Swiss real estate market has increased significantly in the third quarter. This is indicated by the UBS Swiss Real Estate Bubble Index, which is now at 1.2 points. Official recognition of a price bubble occurs at 2 points, according to ee24.com referring to bloomberg.com.
The Swiss market is growing at accelerated pace over the past two decades due to loose monetary policy of the central bank, which provides low mortgage rates.
According to UBS, the Index growth in the third quarter was caused by the growth of real estate prices, which reached 4.2% year on year. And this despite the fact that the Swiss central bank forecasts the economy will grow this year by 1.5% - 2%.
Moreover, real estate prices rose faster than the households' revenues. In the third quarter of 2013 the average home in Switzerland was worth 6.1 times the average annual income of a Swiss family, compared with a normal level of 5.2 annual salary.