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

Miami has now been identified as holding the highest risk of a real estate bubble among global cities, according to the UBS Global Real Estate Bubble Index.

The annual report, which assesses the susceptibility of property markets to potential price corrections, indicates that the overall risk of a housing bubble has slightly decreased for the second year in a row, as reported by the bank.

While imbalances in the European market have diminished and conditions in the Asia-Pacific region have remained stable, UBS noted an increase in bubble risks in the U.S., with Miami at the forefront.

In addition to Miami, cities such as Tokyo and Zurich are also flagged for having high bubble risks, although Zurich’s risk level has significantly decreased compared to the previous year.

Other cities facing elevated bubble risks include Los Angeles, Toronto, and Geneva. In contrast, moderate bubble risks are present in cities like Amsterdam, Sydney, and Boston.

Interestingly, Dubai has experienced the most significant rise in bubble risk among the cities evaluated, highlighting its booming real estate market.

The report indicates that San Francisco and New York exhibit a low risk of a real estate bubble. Similarly, in Europe, cities like London, Paris, Stockholm, and Milan have been categorized as low-risk following further declines in their index scores. Warsaw also maintains a low bubble risk, while São Paulo shows the least risk among the cities analyzed.

UBS notes that inflation-adjusted housing prices across the surveyed cities are, on average, 15% lower than they were in mid-2022, largely due to rising global interest rates.

Some cities that previously faced significant bubble risks, such as Frankfurt, Munich, and Stockholm, have seen real prices fall by over 20%. Despite these corrections, real estate markets in Dubai and Miami have continued to thrive, while “strong corrections” were noted in Paris and Hong Kong. Conversely, cities like Vancouver, Sydney, and Madrid have experienced real price increases of more than 5% compared to the previous year.