The average rise in housing prices, however, stopped in Europe for the first time since 2012, while the average index fell slightly in 2019.Įxplore the seven cities with the highest bubble risk and their key real estate takeaways for 2019.Ģ019 indicator: 1.54 | 2018 indicator: 1.44 In all the cities of the Eurozone monitored by UBS, there was an increase in the index due to low interest rates, the bank said. This is the basic affordability measure for housing. The UBS Global Real Estate Bubble Index provides an indication of price-to-income levels across select global cities. In the understanding of the bank, any city whose indicator is above 1.5 in this index is considered to be at risk of a “bubble”. What kind of calculation method was implemented? The Bank considers five factors: the price of real estate to income from it and the price of real estate to the value of its rent, changes in the ratio of mortgages to GDP and construction to GDP, as well as a relative indicator of the value of real estate in the city compared to the price in the country. The UBS Global Real Estate Bubble Index gauges the risk of a property bubble on the basis of such patterns. The term “bubble” refers to a substantial and sustained mispricing of an asset, the existence of which cannot be proven unless it bursts. How to identify a bubble risk? Price bubbles are a regularly recurring phenomenon in property markets.

The UBS Global Real Estate Bubble Index for 2019 puts the housing market into long-term perspective and is designed to track the risk of property price bubbles in global cities. The housing market, as a rule, is one of the most stable and important elements of any modern economy.

UBS Bank ranked the TOP-7 cities with the highest risk of “bubble” in the global real estate market

Global cities housing price index