“The risk of housing bubbles on average has increased over the past year, as has the potential severity of a price correction in many of the cities observed by the index,” said a statement.
Bubble risk in Frankfurt, Toronto and Hong Kong
Frankfurt, Toronto and Hong Kong are at the top of the index this year and therefore represent the three cities with the greatest risk of a bubble among the real estate markets analyzed. The risk is also high in Munich and Zurich, while both Vancouver and Stockholm have returned to the bubble risk zone. Amsterdam and Paris complete the list of cities with a bubble risk. All of the US cities valued – Miami (which replaces Chicago in this year’s index), Los Angeles, San Francisco, Boston and New York – are in overvaluation territory. Imbalances in the real estate market are also high in Tokyo, Sydney, Geneva, London, Moscow, Tel Aviv and Singapore, while Madrid, Milan and Warsaw still have fair valuations. Dubai is the only underrated market and the only city ranked in a lower category than last year.
From mid-2020 to mid-2021 only four cities (Milan, Paris, New York and San Francisco) have not seen an increase in their real estate prices.
In five cities, however, there was even double-digit growth: Moscow, Stockholm and the cities around the Pacific, Sydney, Tokyo and Vancouver. A mix of special circumstances fueled this price rally.
“The coronavirus pandemic has relegated many people to their homes, amplifying the importance of living space and leading to greater availability of payment for housing,” said Claudio Saputelli, Head Real Estate of UBS Global Wealth Management Chief Investment Office.