With interest rates lower than ever before and stock markets in constant turmoil, Swiss investors see the real estate market as a solid asset, according to the bank’s ‘Real estate focus 2012’ report.
But the bank’s research branch warned that the real estate market is “overheated” in Switzerland. Investors’ expectations are “clearly too optimistic”, the bank said, while the bleak outlook for the euro area and a lack of alternative investments make for a “dangerous mix”.
Despite a slowdown in the Swiss economy, UBS said the market “does not seem poised at the brink of a downward spiral in 2012”. It foresees an increase of four percent for flats and 3.5 percent for houses.
The boom in real estate prices will persist for as long as the debt crisis continues to paralyse the global economy, and interest rates are low in Switzerland, said Claudio Saputelli, chief analyst for real estate markets at UBS, to Tagesanzeiger.ch.
Looking at other countries where there was a real estate boom, Saputelli said the situation could become “dangerous”.
“In the five years preceding the collapse of the housing bubble, these countries had an economic growth of well over three percent. After the bubble burst, the economy slowed down for many years in all of them,” he explained.