Which city is the most overrated

New housing market study - real estate bubble risk is greatest in Hong Kong and Munich

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  • The properties in Zurich and Geneva are still moderately overvalued, but without any tendencies towards price increases or decreases.
  • The greatest risk of a real estate bubble is in Hong Kong, followed by Munich, Toronto, Vancouver, Amsterdam and London.
  • This is shown by a UBS analysis of residential property prices in 20 metropolises in industrialized countries.

This year's UBS Global Real Estate Bubble Index, a study of real estate development in the world's metropolises, suggests that in most of the large urban centers of industrialized countries there is a risk of bubbles forming or at least a significant overvaluation.

Risk of bubbles in some cities high

Hong Kong tops the list of the world's cities most threatened by a real estate price bubble. The city has the most overvalued real estate market, the index shows. This is followed by Munich, Toronto, Vancouver, Amsterdam and London.

There are major imbalances in Stockholm, Paris, San Francisco, Frankfurt and Sydney. In Los Angeles, Tokyo and New York, as in Zurich and Geneva, ratings are high. In contrast, the real estate markets in Boston, Singapore and Milan are fairly valued, while the real estate market in Chicago is even undervalued.

In a third of the cities, however, the situation has eased. “We have seen a massive dichotomy in the home market over the past year. In half of the cities prices are rising sharply, in the other half prices have de facto fallen, especially in London, Stockholm and Sydney there were price drops of five to seven percent last year, ”explains Matthias Holzhey, real estate analyst at UBS. The largest declines in the index are recorded in Stockholm and Sidney, which, according to Thursday's announcement, have left the risk zone. Valuations fell slightly in London, New York, Milan, Toronto and Geneva.

In contrast, the overvaluation increased significantly in Munich, Amsterdam and Hong Kong. The market imbalances have also increased in Vancouver, San Francisco and Frankfurt.

Various factors influence Swiss prices

In Zurich, UBS continues to note that the residential property market is overvalued. In the high-priced segment, prices have come under pressure. In the lower price classes, however, the persistently low interest rates and rising incomes would have resulted in further price increases.

In contrast, according to UBS, the real estate market has cooled in the Lake Geneva region. However, the low level of construction activity combined with moderate population growth meant that prices in the city of Geneva remained high due to the insufficient supply.

Switzerland continues to be in a comfortable situation

Switzerland is clearly lagging behind the development of real estate prices in our neighboring countries, says Matthias Holzhey. "The price increase in recent years has been relatively weak in our country, by two to three percent, while prices in other cities have almost doubled in a few years," says the expert. But there is a big difference: "We can afford almost twice as much living space compared to Asian markets, Australia, Canada or London." Thus, Switzerland is in an excellent position in an international comparison.

sda / solv; daed

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  • Commentary by M. Kaiser (clear view)
    Due to the immense accumulation of money in the pension fund sector and savings and the general increase in electronic money in banks, an interest rate reduces the neoliberal growth of the money lords, so now ZERO interest rate. Thus they force the money managers of the cash registers and the savers into the equity business with high risks - so billions are further in the consumption and. Construction industry invests until the bubble bursts and stocks collapse by up to 50%. The game can start all over again - just like in 2008. Ask?
    Agree agree to the comment

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