Different research projects have disagreed over whether there is real estate market bubble in Switzerland.
According to academic research by university ETH Z眉rich and internet company comparis.ch, the Swiss real estate market has 鈥渃ooled down鈥� with no region remaining in 鈥渃ritical鈥� condition regarding price levels.
Real Estate has painted a different picture with its 鈥楽wiss Real Estate Bubble Index鈥�, which in June rose from 1.15 to 1.24 points year-on-year. Regions highlighted as danger zones 鈥渞emain unchanged鈥�.
However, UBS said the index had plateued at a high level for the past four quarters after having increased steadily since inception from 0.51 in mid-2011.
The regions around Z眉rich and Luzern, Basel-City, the region north of lake Geneva, Davos in eastern Switzerland, and Martigny in the Southern part of the country were identified as 鈥渄anger zones鈥�.
ETH Z眉rich, meanwhile, identified 11 red spots on their map of Switzerland in the middle of last year. Only some parts in the Z眉rich/Luzern area were marked in orange meaning they were 鈥渢o be monitored鈥�, as was the city of Locarno and its surroundings in Southern Switzerland.
The most recent real estate report by ETH Z眉rich, meanwhile, is the first of four that has not shown any danger zones.
鈥淭his development confirms that bubbles in Switzerland are not bursting but are releasing air slowly because of the country鈥檚 economic stability,鈥� said Didier Sornette, professor for entrepreneurial risk at the ETH Z眉rich.
Sornette and his research team used over one million prices of apartments and houses published on the comparis.ch website since 2005.
However, the professor said his team鈥檚 research only showed the status quo; international developments could deteriorate the situation again.
Among those 鈥渋nfluences鈥� mentioned by the researchers were the Libor rate, developments on the mortgage market, the euro exchange rate, the level of foreign direct investments in Switzerland, and investments of Swiss abroad, but also the development of the GDP and migration.
For the calculation of the real estate bubble index, UBS Real Estate uses six sub-indices measuring the ratios of purchasing price to rental levels, house prices to household income, mortgage debt to income, building activity to GDP, as well as the level of loan applications filed for apartments for the purpose of re-letting.
Economists Matthias Holzhey and Claudio Saputelli at UBS said the moderate increases in the index in recent quarters were mainly down to increased capital requirements for mortgage applications.
Nevertheless, they rated the danger in certain regions as 鈥渦nchanged鈥� and noted a price increase of over 4% in Southern and Northwestern Switzerland.
