Swiss home prices reaching level of '89 bubble

[ZURICH] Prices in Switzerland's booming housing market are approaching a level last reached in 1989, shortly before a slump in values that hurt the economy for years, UBS said.

Residential-property values are about 5 per cent lower than the market's peak when adjusted for inflation, the Swiss bank said in a report on Tuesday. Even so, price increases slowed to less than the 10-year average last year because of rising long-term interest rates and tougher mortgage-lending standards, UBS said.

"Despite slower momentum, valuations in the Swiss owner-occupied housing market have reached a high," UBS economists Claudio Saputelli said. "This has further increased the risk of a correction."