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Global Real Estate Bubble Risk in 2024
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In many major cities, real home prices have declined as high interest rates are dampening demand.
Simultaneously, property markets are slowing due to tough financing conditions and rising construction costs. As a result, housing bubble risks have eased in cities like Hong Kong, London, and New York. However, strong demand in the luxury market and a booming stock market are fueling bubble risks in cities like Miami and Los Angeles.
This graphic shows the cities with the highest real estate bubble risk, based on the UBS Global Real Estate Bubble Index 2024.
Methodology
To analyze real estate bubble risk, UBS looked at the following factors across 25 major cities:
- Price-to-income ratio
- Price-to-rent ratio
- Change in mortgage-to-GDP ratio
- Change in construction-to-GDP ratio
- City-to-country price ratio
More specifically, bubble risk refers to the likelihood of a significant price correction due to distortions in global property markets
Miami Ranks Highest for Housing Bubble Risk
With real housing prices increasing nearly 50% since the end of 2019, Miami has the highest bubble risk across cities analyzed.
This has pushed the price-to-income ratio higher, as buyers compete for limited waterfront luxury properties. At the same time, the city’s relative affordability compared to other major U.S. metros, along with no state income tax and a favorable climate, has fueled demand.
| Rank | City | Bubble Risk Score 2024 | Rating |
|---|---|---|---|
| 1 | Miami | 1.79 | Bubble Risk |
| 2 | Tokyo | 1.67 | Bubble Risk |
| 3 | Zurich | 1.51 | Bubble Risk |
| 4 | Los Angeles | 1.17 | Overvalued |
| 5 | Toronto | 1.03 | Overvalued |
| 6 | Geneva | 1.00 | Overvalued |
| 7 | Amsterdam | 0.98 | Overvalued |
| 8 | Sydney | 0.78 | Overvalued |
| 9 | Boston | 0.78 | Overvalued |
| 10 | Vancouver | 0.77 | Overvalued |
| 11 | Frankfurt | 0.75 | Overvalued |
| 12 | Hong Kong | 0.74 | Overvalued |
| 13 | Tel Aviv | 0.69 | Overvalued |
| 14 | Dubai | 0.64 | Overvalued |
| 15 | Singapore | 0.59 | Overvalued |
| 16 | Madrid | 0.56 | Overvalued |
| 17 | Munich | 0.54 | Overvalued |
| 18 | San Francisco | 0.48 | Fair Valued |
| 19 | London | 0.41 | Fair Valued |
| 20 | New York | 0.37 | Fair Valued |
| 21 | Paris | 0.35 | Fair Valued |
| 22 | Stockholm | 0.32 | Fair Valued |
| 23 | Warsaw | 0.23 | Fair Valued |
| 24 | Milan | 0.20 | Fair Valued |
| 25 | São Paulo | 0.04 | Fair Valued |
Ranking in second is Tokyo, one of the most unaffordable cities in the world.
Ultra-loose monetary policy and economic stability has contributed to high property valuations in Tokyo. Last year, a 646 square foot apartment cost 15 times more than an average skilled worker’s salary, exceeding levels seen in London and New York.
Although Dubai hasn’t entered bubble territory, home prices surged 17% between Q2 2023 and Q2 2024—the fastest increase among the cities analyzed. Over the past year, the city saw record transaction volumes and strong population growth as buyers flocked to this global financial hub.
By contrast, a number of cities saw their bubble risk decline as real home values dropped, including London, Hong Kong, Paris, and Toronto.
Learn More on the Voronoi App
To learn more about this topic from a housing affordability perspective, check out this graphic on the least affordable property markets around the world.
The post Mapped: Global Real Estate Bubble Risk in 2024 appeared first on Visual Capitalist.