Vancouver’s housing market is the most at risk, according to The UBS Global Real Estate Bubble Index, due to skyrocketing home prices and strong buyer demand. Low interest rates are a big contributor to inflating the potential bubbles.
Home prices in the most at-risk cities have jumped by nearly 50% on average since 2011. At other major cities, prices have increased by less than 15%. In Vancouver, prices have risen more than 25% since the end of 2014.
London is also in the bubble zone with prices being 15% higher than where they were at the 2007 peak, despite the fact that incomes are now 10% lower.
Hong Kong isn’t quite as hot as it has been, but it’s still inflating. Incomes are flat, which has created affordability issues.
While no U.S. cities made the bubble-risk list, some markets there are also heating up. For example, UBS deemed San Francisco’s housing market overvalued, as prices have risen 50% since 2011. Wages have also been strong in the area, increasing faster than the national rate, so affordability is still an issue.