UBS Bubble Index 2026: Zurich has the highest real estate bubble risk worldwide

UBS sees no city in the world with a higher real estate bubble risk than Zurich. In the Global Real Estate Bubble Index 2026, Zurich scores 1.69 points and overtakes Tokyo and Miami. For buyers, this is no reason to panic, but it is a reason for cautious financing.

Zurich ahead of Tokyo, Miami falls behind

UBS published its Global Real Estate Bubble Index on September 22, 2026. The index is released annually; this year marks the twelfth edition. Twenty-three metropolises are analyzed, with Lisbon and Seoul appearing for the first time. UBS assigns the cities to four risk categories: high, elevated, moderate, and low.

Only Zurich with 1.69 and Tokyo with 1.54 points are in the highest category. Miami, which topped the last two editions, drops back to the 'elevated risk' category with 1.41 points. Dubai, Seoul, Lisbon and Geneva also fall into this category. Geneva scores 1.12 points. According to UBS, low financing costs have intensified the imbalances in Zurich and Geneva, especially in Switzerland.

Prices disconnect from rents and incomes

Over the past twenty years, apartment prices in Zurich have risen more sharply than in any other city analyzed. They have increased by almost 140 percent. In the same period, rents have risen by about 40 percent, and incomes by about 30 percent.

The ratio of purchase prices to rents is exceptionally high in Zurich and continues to rise. UBS sees this as an increasing dependence of the market on favorable financing costs. The study cites low interest rates, the influx of international professionals, especially from technology and artificial intelligence fields, as well as scarce supply as drivers. The vacancy rate is close to zero. The supply of residential property remains far below its historical level.

Accordingly, affordability is strained. According to UBS, a qualified professional would need to shell out about eight years' salary to buy a 60-square-meter apartment near the city center. In Hong Kong, it is 15 years.

A 'fair-weather valuation'

UBS economist Matthias Holzhey, main author of the study, refers to Zurich as a 'fair-weather valuation.' Prices are sustainable as long as financing remains cheap. UBS does not expect a crash in the short term, however. 'Higher and in some cases rising financing costs limit the potential for price increases, at least in the short term,' says Holzhey. According to Holzhey, it would only become painful for investors if interest rates rise above two percent, as expensive building projects would then become unprofitable.

Switzerland is currently far from that. The central bank left the key interest rate at 0 percent on September 24 (more on the SNB decision). The SARON is at minus 0.04 percent, the ten-year CHF swap at around 0.79 percent (as of October 5, 2026). The swap rates reflect banks' refinancing costs for fixed-rate mortgages.

Why the Swiss index reads differently

UBS calculates a separate index for the entire Swiss market, the Swiss Real Estate Bubble Index. It rose from 0.62 to 0.72 points in the second quarter of 2026, and thus has risen continuously since the end of 2024. UBS still classifies the risk as moderate. The risk zone only begins at one point, and UBS only speaks of a bubble from two points.

The difference is methodological. The national index reflects the entire Swiss market. The global index, by contrast, compares individual cities, where demand and immigration are concentrated. A moderate national value therefore says little about the situation in Zurich, Geneva, or Lake Zurich.

What this means for mortgage borrowers

An index value does not replace individual case checks. Anyone buying in a region with high valuation risk should pay particular attention to several points.

Keep loan-to-value low. Banks usually finance up to 80 percent of the lending value. A loan-to-value ratio of 60 to 65 percent leaves a buffer in case of a price correction. Up to two-thirds loan-to-value, there is also no obligation to amortize, and rates are often more favorable.

Calculate affordability with buffer. Banks usually check affordability at a notional interest rate of about 5 percent. Additionally, check whether your liquidity will suffice even if the real rate is two to three percent, for example with a follow-up financing.

Choose the term deliberately. If you see rising interest rates as the biggest risk, you can hedge with a long-term fixed-rate mortgage. The low swap rates currently make long terms comparatively cheap. A SARON mortgage is particularly suitable for buyers with solid financial reserves.

Check property value independently. In high-price locations, a second appraisal is worthwhile, independently of the financing bank. A high valuation makes financing easier today. It may become a problem in the event of a later revaluation.

Regulation dampens, but does not prevent

The central bank and FINMA have been monitoring the real estate market for years. The sectoral countercyclical capital buffer is at the statutory maximum of 2.5 percent. It requires banks to hold additional equity capital for mortgages on domestic residential properties.

Since the beginning of 2025, new capital requirements have also applied with Basel III Final (more on this). At the same time, the Bankers Association has repealed the stricter rules for investment properties that were tightened in 2019. Today, the same minimum requirements apply to all property types: 10 percent hard equity and amortization to two-thirds of the loan-to-value within 15 years. These measures make banks more resilient. They do not prevent price overvaluation.

Conclusion

Residential property in Zurich and Geneva is expensive, but still affordable at current interest rates. The bubble index is not a market forecast. Buyers should see it as an encouragement to be generous in assessing their own reserves.

Sources

• UBS: Press release on the Global Real Estate Bubble Index 2026, September 22, 2026
• UBS: Global Real Estate Bubble Index 2026 (study)
• UBS: Swiss Real Estate Bubble Index, Q2 2026
• SRF: Zurich shows the highest real estate bubble risk worldwide
• Bilanz: Zurich: Highest real estate bubble risk worldwide 2026
• finews.ch: Global Real Estate Bubble Index: Zurich is number one again
• SNB: Monetary policy and financial stability at the SNB: the role of macroprudential instruments, speech from August 26, 2026
• Swiss Banking: Basel III Final: SBVg aligns self-regulation in the mortgage sector
• hypothek.ch: Current swap rates