Some of Europe’s biggest cities are most at risk of a housing bubble thanks to super-low interest rates in the eurozone.
"On a global level, economic uncertainty is outweighing the effect of falling interest rates on urban housing demand,” Mark Haefele, chief investment officer at UBS Global Wealth Management said in a press release out Monday. “However, in parts of the Eurozone, low rates have still helped to push real estate valuations into bubble risk territory."
The Zurich-based investment bank UBS said half of the 24 major housing markets around the world that it examined are at risk of a bubble, or have a significant overvaluation. Collectively, inflation-adjusted prices have “come to a standstill,” registering their lowest price increases since 2012.
Munich, Germany, which has seen real prices double over the last 10 years, is at the greatest risk of a bubble, according to the UBS report, with two other European cities, Amsterdam, Netherlands, and Frankfurt, Germany, fourth and fifth on the list, respectively. Toronto, Canada, and Hong Kong are numbers two and three.
As for the U.S., it was the first time since 2011 that no city climbed up the list. San Francisco held at No. 10 while New York City fell to No. 19. Both cities were classified as “overvalued.” Chicago came in at No. 24 and was the only city that was “undervalued.”
Notably, London fell to No. 9 amid the political uncertainty surrounding Brexit.