UBS Wealth Management has launched Global Real Estate Bubble Index to track the risk of housing bubbles in global financial centers.

The UBS Global Real Estate Bubble Index found real estate prices in many global cities have doubled since 1998 in real terms, with prices now largely higher than they were before the 2007-08 financial crisis.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

The report says that risk of a residential property bubble is most distinct in London and Hong Kong. The two cities, among 15 studied, face the greatest risk of overvalued prices.

Sydney, Vancouver, San Francisco and Amsterdam are also significantly overvalued based on long-term norms, says the report. Valuations are also stretched in Geneva, Zurich, Paris, Frankfurt and, to a lesser degree, Tokyo and Singapore.

The report added that the US cities of New York and Boston are fair-valued relative to their own history, while Chicago is undervalued.

Claudio Saputelli, head global real estate in UBS CIO Wealth Management, said: "A mix of optimistic expectations, favorable economic fundamentals and capital inflows from abroad has caused valuations to soar in certain cities in recent years. Loose monetary policy has prevented a normalization of housing markets and encouraged local bubble risks to grow."

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

"The term bubble refers to a substantial and sustained mispricing of an asset. A bubble cannot be proven conclusively unless it bursts, but recurring patterns of property market excesses are observable in the historical data. "It is essential to identify the signs of a bubble early on – that’s why we have launched the UBS Global Real Estate Bubble Index," Saputelli added.

Matthias Holzhey, economist at UBS CIO WM, said: "House prices have decoupled most from local incomes in Hong Kong, London, Paris, Singapore, New York and Tokyo, where buying a 60-square-meter apartment exceeds the budget of most people who work even in the highly skilled service sector."