By Neil MacLucas
ZURICH--Switzerland's government, central bank and mortgage
lenders have successfully tamped down on growth of the Alpine
country's surging property market, according to a quarterly real
estate report released on Tuesday.
UBS AG said its index of housing prices edged 0.02 points higher
in the three months ended June 30, though it remains above the 1.0
level that indicates an overheated market. Still the index's level,
1.24 is well below the 2.5 peak it reached during the last Swiss
real estate bubble in the early 1990s.
Swiss property prices have surged over the past two years as
record-low interest rates and an influx of wealthy migrants pushes
up demand for condominiums and houses. The surging market has
prompted warnings and action from the Swiss National Bank, which
has twice imposed additional capital buffers on banks extending
mortgages.
Last month, Finma, Switzerland's financial markets regulator,
backed measures proposed by the Swiss Bankers Association, an
industry organization, to reduce the time borrowers have to repay
debt, as well as changing rules covering the eligibility of second
incomes when assessing credit risk.
Banks have been tightening mortgage criteria over the past
year.
The measures "are constricting prices for residential real
estate and stifling the outlook" for price gains, UBS said in the
report. It called the measures "successful."
Since the financial crisis, which triggered a downward spiral in
borrowing costs, condominium values have risen by roughly 30% and
detached home prices by more than a quarter, according to data
compiled UBS and property consultants Wüst & Partner.
Switzerland's big cities--Zurich, Geneva, Lucerne and
Lausanne--and low-tax locations such as Zug, have seen the sharpest
rises in residential property prices, according to the report. They
remain the areas most vulnerable to price declines, it said.
Write to Neil MacLucas at neil.maclucas@wsj.com