The Swiss Real Estate Bubble Index calculated by UBS rose slightly in Q1 2025 from a revised 0,25 to 0,29 index points. The risk of a real estate bubble is thus still classified as moderate, the bank stated in a press release on Thursday.

UBS experts consider an index level of 1,0 as the threshold for elevated risk, while values above 2,0 indicate an «acute» risk.

Multiple factors make a significant price correction appear unlikely. These include the low cost of homeownership compared to renting, overall moderate mortgage demand, and a continued slowdown in residential construction.

Strong Price Momentum

Home prices rose 1,5 percent nominally in quarterly comparison, marking the strongest increase since mid-2022. Compared to the previous year, prices increased by 3,2 percent nominally, or 2,8 percent in real terms.

As for rents, asking rents and existing rents rose by 2,2 percent and 3,2 percent year-on-year, respectively, during the first three months of the year. However, the momentum for asking rents has clearly slowed. UBS expects that the reference interest rate reduction in March 2025 will dampen the increase in existing rents in the coming quarters.

UBS calculates the Bubble Index based on a range of indicators. These include imbalances in the development of property prices relative to rents, construction activity, household income, general inflation, and economic growth.

Regional Imbalances

(Graphic: UBS)

Regionally, significant imbalances are observed almost exclusively in the tourism regions of Graubünden, attributed to the boom in second homes amid tight supply.

In Western Switzerland, elevated imbalances are seen only in the Lausanne and Yverdon regions. Due to below-average price development, the Geneva region no longer shows elevated imbalances. In German-speaking Switzerland, only the Einsiedeln region is flagged for high imbalance.

Further Price Increase in April

Residential property prices are likely to have continued rising in April, according to data from ImmoScout24 and consulting firm Iazi.

Offering prices for condominiums rose 0.6 percent month-over-month, and for single-family homes by 0,1 percent.

According to the market survey published on Thursday, there were clear regional differences. The strongest increases for advertised homes were observed in the Lake Geneva region (+1,1 percent), Northwestern Switzerland (+1,0 percent), and Central Switzerland (+0,9 percent). In Greater Zurich, the rise was 0,5 percent.

(Graphic: ImmoScout24)

In contrast, asking prices declined in the Midlands (–0,5 percent), Eastern Switzerland (–1,3 percent), and Ticino (–1,8 percent).

For condominiums, the sharpest price increases were seen in Central Switzerland (+1,2 percent) and Northwestern Switzerland (+1,1 percent), followed by Lake Geneva (+0,9 percent) and Ticino (+0,8 percent). In Zurich, prices rose slightly by 0,1 percent, while in Eastern Switzerland, they fell by 0,7 percent.