Property price increases in Switzerland’s two largest cities – Zurich and Geneva – have far outpaced income growth, according to a recent UBS study. This is making housing “unaffordable for residents,” experts warn.
Zurich and Geneva are among the cities with the highest risk of a bubble, according to a new UBS study.
With an index of 1.55 points, after 1.51 points in 2024, Zurich even ranks third among cities with the highest risk of overheating, just behind Miami and Tokyo, according to the Global Real Estate Bubble Index . Geneva (1.05 points) comes seventh in the ranking, which covers 21 urban centres in total.
Overall, “prices, adjusted for inflation, are tending to decline,” Matthias Holzhey, the study’s lead author said.
The declines have been around 20 percent over the past five years in cities previously identified as being at risk of bubbles -such as Frankfurt, Paris, and Hong Kong. The decline in housing affordability has weighed on demand, resulting in stagnant real prices over the past four quarters.
“But some cities are bucking the trend, notably Zurich and Geneva, where prices have continued to rise,” Holzhey said. “Over the past year alone, real prices, adjusted for inflation, have climbed 4 percent in Geneva and 5 percent in Zurich, where the cumulative increase since 2021 has reached 25 percent.
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In both cities, the rise in property prices has also far outstripped the growth in income, another UBS expert, Maciej Skoczek pointed out.
In this context, “when housing prices become unaffordable for citizens, additional regulations may be introduced,” he noted, adding that “this type of measure could reduce the attractiveness of these urban centres, with the risk of slowing down housing construction, which would prove counterproductive.”
