Miami Leads Global Real Estate Bubble Risk

Investing.com — Miami now holds the highest real estate bubble risk among global cities, according to the UBS Global Real Estate Bubble Index.

The annual report, which tracks the vulnerability of property markets to potential price corrections, reveals that the risk of a housing bubble has slightly decreased overall for the second consecutive year, according to the bank.

However, while imbalances have lessened in Europe and remained stable in the Asia-Pacific region, UBS noted that they have increased in the U.S., with Miami leading the pack.

In addition to Miami, cities like Tokyo and Zurich also rank high for bubble risk, though Zurich’s score has dropped significantly compared to last year.

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

Notably, Dubai experienced the largest increase in bubble risk among the cities analyzed, highlighting its hot real estate market, according to UBS.

According to the Index, San Francisco and New York exhibit a low risk of a real estate bubble. In Europe, after further declines in index scores, London, Paris, Stockholm, and Milan also fall into this low-risk category. Bubble risk in Warsaw remains low as well, while São Paulo shows the lowest bubble risk among the analyzed cities.

The bank highlights that inflation-adjusted housing prices across analyzed cities are, on average, 15% lower than in mid-2022, driven by rising global interest rates.

They note that some cities previously facing high bubble risks, such as Frankfurt, Munich, and Stockholm, saw real prices fall by over 20%.

Despite these corrections, markets in Dubai and Miami have continued to surge, while “strong corrections” were observed in Paris and Hong Kong. Cities like Vancouver, Sydney, and Madrid saw real price increases of more than 5% compared to last year.