Friday , 29 September 2023

Global Real Estate Bubble Index: Toronto Most Overvalued, San Francisco a Distant 10th (+2K Views)

Swiss-based mega bank UBS, updated its Global Real Estate Bubble Index.dollar bubbles The index, looks for cities that experience price climbs that disconnect from fundamentals. Topping the list this year is Toronto, and in fourth place is Vancouver. San Francisco is in 10th. Let’s take a look at the bubble factors they’re observing.

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UBS analysts note prices are elevated beyond logic in many global cities, with Canada nabbing two of the top 10 spots. The firm attributes a combination of low interest rates and foreign capital, meeting up with a local “fear of missing out.”

UBS Global Real Estate Bubble Index Chart

Topping the list this year is Toronto, which the bank believes is the most at risk market in the world. Analysts noted price growth reached an “excessive 20% year on year in the last quarter.” Inflation adjusted, prices have doubled in the past 13 years. Rents have only increased by 5%, and incomes less than 10%. The firm believes either a stronger Canadian dollar, or another interest rate hike, would send the market spiraling lower.

…The report warns that investors in these “wildly overvalued markets should at least not expect real price appreciation in the medium to long run.” Basically, they’re calling a top on price growth.

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