UBS is warning of elevated bubble risk in several major cities globally, driven by rapid house price appreciation and a disconnect between housing prices and local incomes. The UBS Global Real Estate Bubble Index 2023 highlights cities like Toronto, Zurich, and Miami as being most at risk of a bubble.
The report emphasizes that the sharp rise in mortgage rates has significantly impacted affordability, creating a correction phase in many markets. While some cities have already seen price corrections, others remain highly vulnerable due to unsustainable price levels relative to wages and rents. The shift from a low-interest rate environment has put downward pressure on housing valuations.
Specifically, European cities, particularly those in Switzerland and Germany, remain overvalued. While some US markets are cooling, Miami is flagged as a major concern. The report suggests that cities with strong underlying economic fundamentals, such as sustainable population growth and diverse job markets, are better positioned to weather the correction than those driven primarily by speculative investment.
Ultimately, UBS anticipates further price adjustments in the coming years as the effects of higher interest rates and tighter lending conditions continue to ripple through the global housing market. The future performance of these markets hinges on the ability of local economies to support the high valuations and the capacity of buyers to absorb higher borrowing costs.
find the original article here: https://finance.yahoo.com/video/ubs-elevated-bubble-risk-la-065625953.html
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