World property prices compared: This Swiss city has the highest risk of a property bubble

class=”sc-29f61514-0 icZBHN”>

The risk of a real estate bubble in Zurich is at the highest level in the world. This emerges from UBS’s “Bubble Index 2023,” which the big bank released to the public on Wednesday.

The situation in the city of Limmat is worrying compared to the other 24 major cities around the world examined in the index. The cost of buying a property for your own use in Zurich is nominally 50 percent more today than it was a decade ago. A growing number of high-income earners and extremely low interest rates have fueled the price increase. Real housing prices in Zurich continued to increase in 2023, albeit slower than in previous years. Moreover, the price level has not yet been adjusted to the increasing financing costs.

According to UBS, the Zurich real estate market is therefore at risk of a bubble. Only Tokyo, the capital of Japan, is included in this red area. There is a “bubble risk” above a value of 1.5 points. In Zurich, this value is 1.71 points, and in Tokyo it is 1.65 points. All other metros are below the threshold.

Swiss market continues to overheat

For now, a slight weakening is expected in Zurich. According to real estate experts at UBS, prices remain high because, among other things, property owners have no pressure to sell.

Rent growth has also accelerated sharply and exceeded the growth in property prices in recent quarters. The available supply of properties for sale has already risen to pre-pandemic levels due to rising financing costs. Rents increased by nine percent in one year – a Swiss record!

UBS has been warning about a real estate bubble in Zurich for years. The situation in Geneva is now slightly more relaxed, which means the risk of a bubble there is significantly lower (1.13 points). House prices in Geneva are less than 20 percent higher than a decade ago and remain stable between mid-2022 and mid-2023. Although the Rhone city benefits from its status as the headquarters of several international organizations, the economic outlook is mixed. Population growth also remains weak due to high migration to more affordable areas, according to UBS.

“The weather came out.”

Overall, UBS analyzes that imbalances in urban housing markets are decreasing. This is due to the global rise in inflation and interest rates in the last two years. From mid-2022 to mid-2023, real estate prices in the cities analyzed fell by an average of 5 percent. The correction phase is likely to continue. “The weather is over,” says UBS.

Last year, in addition to Zurich and Tokyo, there were seven other cities in the real estate “bubble risk” category: Toronto, Frankfurt, Munich, Hong Kong, Vancouver, Amsterdam and Tel Aviv. They are now considered simply “overvalued.” Housing markets in Miami, Geneva, Los Angeles, London, Stockholm, Paris and Sydney also remain overvalued.

Source :Blick