UBS warns of risk of bubble in Zurich and Tokyo real estate markets



09/27/2023 10:20 AM


In its annual industry report, the Swiss bank UBS Group AG expressed concern about the possibility of a "bubble" in the Zurich and Tokyo real estate markets.



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The value of residential real estate has decreased over the previous two years, both internationally and in some large cities in particular, as a result of weaker demand brought on by inflation and rising interest rates. According to the research, the present decrease in property values is the sharpest since the financial crisis of 2008.

At that, certain cities show the reverse trend. For instance, the value of real estate increased by 40% in Zurich, the top-ranked Swiss city, between 2012 and 2022, a rate that was significantly higher than that of other Swiss cities. At the same time, rents grew by roughly 12%.
A "bubble" is a possibility given these disequilibrium dynamics and the sharp rise in the price of home, according to UBS.

A slightly better position may be seen in Tokyo, where population expansion and favorable investment circumstances have driven real estate prices up over the past 20 years nearly without interruption. Housing costs in the city were 15 times greater in 2022 than the median yearly income of metro residents.

source: cnbc.com

 


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