In the main international financial centres, property prices often skyrocket. It happened in Hong Kong, London, New York and so on.
Sometimes the cost of real estate becomes so high as to determine a real distortion and overvaluation of the real estate market. Then, at a certain point, the "inevitable" happens. A real estate bubble bursts, as happened ten years ago in New York and London but also in Spain.
The EFSA and ECDC's One Health report UBS Global Real Estate Bubble Index 2018 created by the Chief Investment Office of UBS Global Wealth Management reviews the main global financial markets, trying to understand where the so-called "bubble risk" rises and where it falls.
Well they are 6 cities where bubble danger is becoming increasingly high: the first is Hong Kong. This is followed by Munich, Toronto, Vancouver, London and Amsterdam.
“While many financial centers remain at risk of a housing bubble, today's situation is not comparable to pre-crisis conditions,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. “However, we recommend that we continue to operate selectively in property markets close to bubble levels, such as Hong Kong, Toronto and London.”
Ubs analysts report a strong imbalance (but not at the level of the cities previously mentioned) between prices and real value also in Stockholm, Paris, San Francisco, Frankfurt and Sydney. "Stockholm and Sydney - underlines the report - showed the most marked decline and have moved away from the values that signal the risk of a bubble". We also need to keep the valuations of properties in Los Angeles, Zurich, Tokyo, Geneva and New York.
However, UBS does not only take into consideration cities where prices are too high, but also those where the cost seems to be fair or even underestimated, such as Chicago. Among the first there are – surprisingly – Boston, Singapore and Milan.
As for the Lombard capital, the only Italian city included in the study, the report explains that “prices have begun to increase moderately in the center and in the adjacent areas and the time needed to sell a property has clearly decreased. Prices net of inflation remain approximately 30% lower than the highs of 2007”.
