Switzerland's real estate bubble index decreased for the first time in four years in the second quarter, keeping further away from the risk zone, a report from the UBS Bank showed Friday.
The UBS Real Estate Bubble Index dropped 0.13 point sequentially to 0.82 in the second quarter, marking the first decline in four months.
The decline indicates that the market has become slightly cooler, but it is not a sign of a trend reversal. The strong upward trajectory of the index seen in recent quarters was stopped by a decline in asking prices of residential properties, combined with a rise in incomes and stagnation in consumer prices, the agency said.
The indicator was launched in May last year by the UBS Wealth Management Research and is designed to track the risk of a real estate bubble in the Swiss residential housing market. If the index falls between 1 and 2, the real estate market is considered to be in the risk zone.
UBS said it expects the minimum requirements for mortgage financing instituted last month will curb demand for residential property and slow down price growth rates somewhat in upcoming quarters.
by RTT Staff Writer
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