Swiss UBS Real Estate Bubble Index Nears Risk Zone In Q4

Switzerland's real estate bubble index rose to its highest in almost 20 years in the fourth quarter, edging closer to "risk zone", a report from the UBS Bank showed Friday.

The UBS Real Estate Bubble Index scored 0.80 in the fourth quarter, up by 0.22 index points since the third quarter. The current value indicates a continued housing market boom. When the index surpasses a value of 1, the market is considered risky.

The indicator was launched in May by UBS Wealth Management Research and is designed to track the risk of a real estate bubble in the Swiss residential housing market. The index reached its peak in the early 1990s at a level of 2.5 at the height of the last Swiss real estate bubble.

The steep rise has been fueled by a relatively strong surge in home prices, slight deflation and stagnant incomes. The impact of record-low interest rates is also hard to ignore, the report said.

The bank's research group forecast the real estate market trend to probably become even more pronounced this year. Low interest rates should keep demand strong until the end of 2012 and prices should keep booming for the foreseeable future, it said. (Provided by RTTNews)