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Global House Bubble Alert

27.10.21

House prices in prime markets around the world have continued to climb through the pandemic, despite widespread economic turmoil and uncertainty, reports Abode2.

Knight Frank’s Global House Price Index recently recorded its fastest rate of inflation since 2005, while Savills estimates that the total value of the world’s homes increased by 8% last year – even as global GDP fell by 3%.

Now investment bank UBS has weighed-in, assessing which international markets are most at risk of a property bubble. The firm’s Global Real Estate Bubble Index analyses residential property prices in 25 major cities around the world, assessing where looks most over-valued and so at risk of a sharp correction.

European housing markets are still hot, and imbalances are sky-high and the cities around the Pacific (Sydney, Tokyo, and Vancouver) recorded double-digit price growth over the last three years.

London was in “bubble risk territory” back in 2018, but falling house prices pushed it into merely “overvalued” status in 2019 – where it remains in 2021. Homes in the UK capital are now less over-valued than in most other major world cities, according to UBS, having recorded the second-lowest rate of property price growth of any of the tracked locations over three years.

London’s market appears, however, to have bottomed out, with prices now back on the rise. UBS reckons that real house prices in London increased by almost 4% in the 12 months from June 2020 (compared to +6% across the 25 tracked cities).

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