Global Property Markets Most At Risk Of A Bubble – Revealed

London’s housing market is now rated low risk by the UBS Global Real Estate Bubble Index, the annual gauge of price imbalances across 21 major cities worldwide.

The index – first published in 2015 – measures the gap between house prices and fundamentals like incomes, rents, and mortgage rates to flag the likelihood of a speculative bubble.

This year’s report shows London continuing a long slide from its 2016 high: real prices remain around 20% below that peak and 5% under the 2007 level. Overseas demand is recovering in the UK capital, said the bank, with a weak pound and the city’s global status continuing to draw foreign capital, but prime buyers “remain cautious… as surcharges and less favourable tax treatment for non-residents weigh on demand.”

UBS notes that global housing markets have cooled for a third consecutive year as higher borrowing costs squeeze affordability.

Cities once considered overheated – including Frankfurt, Paris, Toronto, Hong Kong and Vancouver – have seen inflation-adjusted prices fall roughly 20% since 2021.

At the other end of the scale, Dubai and Madrid have recorded the sharpest rise in bubble risk over the past 12 months, with Dubai’s real prices up 50% in five years. Miami tops the global ranking for bubble danger, followed by Tokyo and Zurich.