Bank gives cautious all-clear for real estate bubbles
According to the UBS study, the bubble risk in the residential real estate market remains high, particularly in cities such as Miami, Tokyo and Zurich. However, the index shows that the risk is declining slightly in many cities. The economic outlook will have a strong influence on price trends in the coming years.
UBS has presented this year’s edition of its Global Real Estate Bubble Index. According to a press release, the bubble risk in the residential real estate market has fallen slightly for the second year in a row. For its study, the Zurich-based bank examined the real estate situation in 25 major cities around the world. Of all the cities, Miami on the east coast of the USA shows the greatest risk. The Japanese capital Tokyo ranks second. Zurich also has a high bubble risk, although there has been a significant decline here compared to the previous year, according to the press release. Geneva, Los Angeles and Toronto also fall into the “increased risk” category. Locations affected by moderate risk include Amsterdam, Frankfurt/Main, Munich, Tel Aviv and Hong Kong. A low risk is expected in London, Milan, Paris and Stockholm as well as outside Europe in New York, San Francisco and São Paolo.
“Real home prices in many cities have bottomed out. The economic outlook will determine the dynamics of future price development more than in recent years,” Matthias Holzhey, lead author of the study at UBS Global Wealth Management, is quoted as saying in the press release.