The Switzerland's housing market has gotten increasingly riskier in the first quarter, suggesting moves by the government to deflate a property bubble are starting to take effect.
The real estate bubble index rose 0.06 points to 1.17 points, lower than the average quarterly rise of 0.11 points over the past four years, according to a statement from UBS AG released Thursday. A reading above 2 would indicate a bubble.
"The risks in the real estate market have continued to rise," Matthias Holzhey and Claudio Saputelli at UBS said in the statement, according to Reuters.
"... Switzerland has brought in rules on cyclical capital cushions that should put a brake on the markets."
The index was in risk zone, according to UBS. The increase can be attributed to continuing price increases for residential real estate and to an increase in mortgage loans alongside stagnating household incomes and consumer prices, the report said.
Propelled by low interest rates, Swiss house prices have risen more than 20 percent in the past four years, outpacing the rest of Europe. High immigration, particularly of skilled workers from European Union countries, has also kept demand for housing strong.
