The UBS Swiss Real Estate Bubble Index fell to 0.95 points in the first quarter of 2024, lowering the risk of a real estate bubble from "elevated" to "moderate." Despite a 0.7% increase in home prices during the quarter and a 3.2% rise year-over-year, the risk remains low due to weaker price dynamics and falling interest rates.

This reduction in the index reflects a stabilization in the market, likely influenced by regulatory measures and economic conditions that favor a balance between housing supply and demand. The cooling of the real estate market suggests a healthier adjustment away from the rapid price increases seen in previous years, providing a more sustainable environment for both buyers and investors. As the market continues to stabilize, stakeholders might find it an opportune time to reassess their strategies in light of these evolving conditions.

Due to decreasing mortgage rates and rising rents, purchasing real estate is becoming more attractive again. According to a UBS study, the costs of acquiring property are falling, making buying cheaper than renting in some regions of Switzerland. This trend is particularly noticeable in cantons such as Vaud, Fribourg, and Valais. Those considering purchasing a property should seize this opportunity, as demand—and potentially prices—could rise again.

This shift could lead to a more dynamic real estate market, encouraging potential buyers who have been hesitant due to high costs. Additionally, the current financial climate presents a favorable scenario for first-time buyers and investors alike, potentially boosting the overall economy as more people invest in property. As the market adjusts, the benefits of owning over renting could become more pronounced, influencing long-term housing decisions across Switzerland.

The Swiss National Bank (SNB) lowered its key interest rate again on June 20, this time by 0.25 percentage points to 1.25%. The goal is to support the economy and weaken the Swiss franc, thereby boosting the export sector. This is the second consecutive rate cut, a response to decreasing inflationary pressures. However, the SNB cautions that there is limited room for further rate reductions.

This move reflects the central bank's proactive stance in addressing economic headwinds while acknowledging the complexities of monetary policy in a low inflation environment. The decision is part of a broader strategy to mitigate the risk of economic slowdown and maintain price stability, while keeping an eye on global economic developments that might impact Switzerland's financial stability. The SNB remains committed to adjusting its policies as necessary to ensure sustainable economic growth.