This US City Faces the ‘Highest Real Estate Bubble Risk,’ According to UBS

Miami has been identified as the city with the highest risk of a real estate bubble globally, according to the UBS Global Real Estate Bubble Index.

The annual report assesses the susceptibility of property markets to potential price corrections and indicates that the overall risk of a housing bubble has slightly decreased for the second consecutive year. However, imbalances in the U.S. have grown, with Miami being notably affected.

Besides Miami, other cities such as Tokyo and Zurich also rank high for bubble risk, although Zurich has seen a significant decline in its score compared to last year. Elevated risks are reported in Los Angeles, Toronto, and Geneva, while moderate bubble risks are evident in Amsterdam, Sydney, and Boston. Dubai experienced the largest increase in bubble risk among the analyzed cities, reflecting its thriving real estate market.

The report also mentions that cities like San Francisco and New York show a low risk of a real estate bubble. In Europe, London, Paris, Stockholm, and Milan have also fallen into the low-risk category after further declines in their index scores. Warsaw maintains low bubble risk, while São Paulo exhibits the least risk among the studied cities.

The bank points out that, on average, inflation-adjusted housing prices in these cities are currently 15% lower than they were in mid-2022, primarily due to rising global interest rates. Notably, cities that previously exhibited high bubble risks, including Frankfurt, Munich, and Stockholm, have seen real prices drop by over 20%.

Despite these corrections, markets in Dubai and Miami continue to thrive. Conversely, significant corrections have been observed in Paris and Hong Kong. Meanwhile, cities like Vancouver, Sydney, and Madrid have recorded real price increases of more than 5% compared to the previous year.