UBS says Real Estate Bubble is growing in the world

Real estate markets are once again heating up in the world: in some cities prices are overrated, says UBS, according to 2016-edition "Global Real Estate Bubble Index". In Geneva and Zurich, the two swiss select cities, tension remains but at a lesser extent.

As published today by UBS, a few years later by the great wave of corrections in the real estate sector worldwide, overestimates have widened in most cities.

Vancouver is the one with the greatest risk of the property bubble, followed by London, Stockholm, Sydney, Monaco and Hong Kong, among 18 cities examined by the experts of the number one Swiss banking. In the canadian town, which scores 2.14, real house prices have increased by more than 25% since the end of 2014, due to high foreign demand. 

The index traces the fundamental valuation of housing markets, the valuation of cities in relation to their country and economic distortions (lending and building booms).

Since 2011, real estate prices, in risk bubble cities, increased on average by around 50%, Claudio Saputelli indicates, Head Global Real Estate
Chief Investment Office WM. In other financial centers, the increase did not exceed 15%.

According to Index, Zurich’s residential market is overvalued, score is 1.03. After a setback in the last twelve months in the city on-Limmat, real estate have started to grow following the rebound in prices and weak economic growth and, as the report says, "the city has the best private rental market affordability of all financial centers included in the index". Both cities are currently away from the risk of bubble, according to UBS economists.

However, as the editorial indicates, "Even in the cities with the clearest signs of a real estate bubble, it is not possible to predict exactly the timing and duration of a correction".