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UBS Global Real Estate Bubble Index 2026: Zurich and Tokyo lead global housing bubble risk
(MENAFN- MENAFNEditorial) Among the cities analyzed in the UBS Global Real Estate Bubble Index 2026, Zurich and Tokyo are classified as being at high risk of a housing bubble. Miami, which ranked highest in the past two editions, has fallen back into the elevated-risk category, joining Dubai, Seoul, Geneva, and Lisbon.
Risk levels are moderate in Los Angeles, Sydney, Toronto, Vancouver, Hong Kong, and Singapore. In Europe, Amsterdam, Madrid, Frankfurt, Munich, and Milan also fall into the moderate risk category, while Paris and London face low bubble risk. Outside Europe, only New York, San Francisco, and São Paulo fall into the low-risk category.
Lisbon and Seoul recorded the largest increase in bubble risk this year. Imbalances also intensified in Milan, Hong Kong, Madrid, and Dubai, although bubble risk in Dubai has eased since March. In Switzerland, low financing costs continued to contribute to rising risks in Zurich and Geneva. In contrast, imbalances eased in Tokyo and Sydney, while Singapore held steady. Across North American cities, bubble risks eased as elevated financing costs further eroded affordability and dampened housing demand. Frankfurt and Amsterdam posted the sharpest declines in risk scores among European cities.
Higher-for-longer rates curb demand
House prices, rents and incomes were broadly flat in real terms over the past year, masking substantial differences across cities. Seoul, Lisbon, Madrid, and Hong Kong recorded the strongest increases, with real house prices rising by around 10. By contrast, Vancouver and Toronto recorded declines of roughly 10%. Frankfurt and Munich also recorded price drops, albeit at a more moderate pace.
Matthias Holzhey, lead author of the study and economist at UBS Global Wealth Management’s Chief Investment Office, says: “Higher-for-longer financing costs are likely to cap house-price gains in the near term.” Across most cities, the annual ownership costs of a newly purchased 60 sqm (650 sqft) home, including mortgage interest and maintenance, exceed 40% of a highly skilled worker's gross income, illustrating the strain on affordability. Home ownership costs are currently substantially higher than rents, most notably in cities such as Munich, Hong Kong, and Sydney.
Uneven inflation protection
In over half of the cities analyzed, housing did not provide inflation protection over the last five years. Markets identified as being at high bubble risk in 2021 subsequently recorded the sharpest price declines, averaging roughly 15% since then. The magnitude and persistence of the inflation shock also mattered: cities with above-average inflation experienced average real house price declines of roughly 5%, while those with below-average inflation achieved average real annual price growth of around 10% over the same period.
Maciej Skoczek, author of the study and economist at UBS Global Wealth Management’s Chief Investment Office, explains: “At current valuations, housing in most cities is nevertheless likely to provide inflation protection over the medium term.” Demand for urban housing remained strong, as reflected in rental growth, which has generally kept pace with, and in many cases exceeded, income growth over the past five years. Ongoing supply constraints underpin this outlook.
Risk levels are moderate in Los Angeles, Sydney, Toronto, Vancouver, Hong Kong, and Singapore. In Europe, Amsterdam, Madrid, Frankfurt, Munich, and Milan also fall into the moderate risk category, while Paris and London face low bubble risk. Outside Europe, only New York, San Francisco, and São Paulo fall into the low-risk category.
Lisbon and Seoul recorded the largest increase in bubble risk this year. Imbalances also intensified in Milan, Hong Kong, Madrid, and Dubai, although bubble risk in Dubai has eased since March. In Switzerland, low financing costs continued to contribute to rising risks in Zurich and Geneva. In contrast, imbalances eased in Tokyo and Sydney, while Singapore held steady. Across North American cities, bubble risks eased as elevated financing costs further eroded affordability and dampened housing demand. Frankfurt and Amsterdam posted the sharpest declines in risk scores among European cities.
Higher-for-longer rates curb demand
House prices, rents and incomes were broadly flat in real terms over the past year, masking substantial differences across cities. Seoul, Lisbon, Madrid, and Hong Kong recorded the strongest increases, with real house prices rising by around 10. By contrast, Vancouver and Toronto recorded declines of roughly 10%. Frankfurt and Munich also recorded price drops, albeit at a more moderate pace.
Matthias Holzhey, lead author of the study and economist at UBS Global Wealth Management’s Chief Investment Office, says: “Higher-for-longer financing costs are likely to cap house-price gains in the near term.” Across most cities, the annual ownership costs of a newly purchased 60 sqm (650 sqft) home, including mortgage interest and maintenance, exceed 40% of a highly skilled worker's gross income, illustrating the strain on affordability. Home ownership costs are currently substantially higher than rents, most notably in cities such as Munich, Hong Kong, and Sydney.
Uneven inflation protection
In over half of the cities analyzed, housing did not provide inflation protection over the last five years. Markets identified as being at high bubble risk in 2021 subsequently recorded the sharpest price declines, averaging roughly 15% since then. The magnitude and persistence of the inflation shock also mattered: cities with above-average inflation experienced average real house price declines of roughly 5%, while those with below-average inflation achieved average real annual price growth of around 10% over the same period.
Maciej Skoczek, author of the study and economist at UBS Global Wealth Management’s Chief Investment Office, explains: “At current valuations, housing in most cities is nevertheless likely to provide inflation protection over the medium term.” Demand for urban housing remained strong, as reflected in rental growth, which has generally kept pace with, and in many cases exceeded, income growth over the past five years. Ongoing supply constraints underpin this outlook.
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