Risks to the Swiss real estate market remained “practically unchanged” at a risky level in the third quarter, kept in check by stagnant nominal owner-occupied home prices and declining investment demand for condominiums.

The UBS Swiss Real Estate Bubble Index rose to 1.38 points in the three months through September from 1.37 points in the previous period, according to a statement from UBS Group AG on Wednesday. A reading above 2 indicates a bubble.

“Third-quarter mortgage loan volume rose 3.4 percent year on year, however, a relatively strong showing,” Matthias Holzhey and Claudio Saputelli at UBS in Zurich said. “Relative to incomes, growth remains well above the long-term average.”

Source: UBS

According to the UBS index, 17 regions are especially risky, unchanged from last quarter.

While the index is now at the highest since 1991, data last week indicated that Switzerland’s real estate market is slowing after more than a decade of annual price increases. The Swiss central bank’s January decision to abandon its cap against the euro made it more expensive for investors from the 19-nation currency bloc to buy property, reducing demand, according to real estate consulting firm Wueest & Partner AG.

The UBS real estate index comprises six sub-indicators tracking the relationships between purchase and rental prices, house prices and household income, house prices and inflation, mortgage debt and income, construction and GDP, and the proportion of credit applications by UBS clients for residential property not intended for owner occupancy.

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