The global rise in inflation and interest rates over the past two years has led to a sharp decline in house prices and the bubble that had built up in previous years in many financial centers, according to the index compiled by UBS (UBS Global Real Estate Bubble Index 2023 ).
UBS analyzed house price changes in 25 major cities around the world from mid-2022 to mid-2023. Real prices fell by an average of 5%, with further declines expected.
Bubble risk only in Zurich and Tokyo
This year, only two cities – Zurich and Tokyo – remain in the bubble risk category, instead of nine cities a year ago.
Toronto, Frankfurt, Munich, Hong Kong, Vancouver, Amsterdam and Tel Aviv, which were previously in the danger zone, are now in the overpriced area.
Unchanged from last year were housing markets in Miami, Geneva, Los Angeles, London, Stockholm, Paris and Sydney, which also remain overpriced.
Reducing imbalances in the US
New York, Boston, San Francisco and Madrid saw a reduction in imbalances. According to the index, these housing markets are now fairly valued, as are Milan, Sao Paulo and Warsaw.
This is also true of Singapore and Dubai, although their reputation as geopolitical safe havens has recently seen demand for both renting and buying rise.