Miami is the city with the highest risk of a bubble in the global housing market, according to this year’s UBS Global Real Estate Bubble Index. Tokyo and Zurich follow, while high risks are also identified in Los Angeles, Geneva, Amsterdam and Dubai.
The annual UBS study analyzes house prices in 21 major cities worldwide. The data shows that, globally, house prices have remained almost unchanged in real terms over the past year, as reduced purchasing power limits demand.
The Champions and the Low Risks
Moderate risk: Sydney, Vancouver, Toronto, Madrid, Frankfurt and Munich.
Low risk: London, Paris, Milan, Hong Kong, San Francisco, New York and S?o Paulo – with the latter recording the lowest risk of all the cities on the list.
Significant fluctuations
“The broad-based upsurge has subsided, with the average bubble risk decreasing for the third consecutive year,” notes Matthias Holzhey, the study’s lead author. Cities that were at high risk in 2021 – such as Frankfurt, Paris, Toronto and Vancouver – saw real prices fall by around 20%.
However, exceptions such as Miami and Dubai have seen spectacular price increases over the past five years (around +50%), while Tokyo and Zurich followed with +35% and +25% respectively. The biggest increase in 2024 was recorded in Madrid, with +14%.
The most affordable cities
Hong Kong remains the least affordable city, requiring 14 years of average income to buy a 60 sq m apartment. Correspondingly high price-to-income ratios are recorded in Tokyo, Paris and London. Overall, homeownership has shrunk by 30% since 2021.
“Tighter regulations, from new taxes to rent controls, have reduced the attractiveness of markets such as Vancouver, Sydney, Paris and London,” explains Maciej Skoczek, author of the study.
Outlook
Despite the pressures, UBS estimates that limited supply and a possible interest rate cut until 2026 could further support the market. Increased demand for assets with positive real returns – such as real estate – may be boosted by the continued rise in public debt.
