The property markets most at risk of a bubble are Zurich and Tokyo

Zurich is the city with the highest risk of a property bubble, followed by Tokyo. The prime segments are showing different trends to the residential market as a whole, whilst access to housing is becoming increasingly difficult.
This is the finding of the UBS Global Real Estate Bubble Index 2026, a study that assesses the risk of a bubble in the world’s major property markets by analysing residential property prices in 23 major cities worldwide. Miami, which had the highest risk in the two previous editions, has now been reclassified as being in the ‘high risk’ category, alongside Dubai, Seoul, Geneva and Lisbon.
The risk appears more moderate in Los Angeles, Sydney, Toronto, Vancouver, Hong Kong and Singapore. In Europe, Milan, Amsterdam, Madrid, Frankfurt and Munich fall into the same category, whilst Paris and London present a low risk of a bubble. Outside Europe, only New York, San Francisco and São Paulo are classified as low risk.

“Lisbon and Seoul have seen the biggest increase in bubble risk this year. Certain imbalances have also become more pronounced in Milan, Hong Kong, Madrid and Dubai, although the risk in Dubai has eased since March. In Switzerland, low financing costs have continued to fuel the risk in Zurich and Geneva. By contrast, markets such as Tokyo and Sydney have seen a reduction in these imbalances, whilst they have remained stable in Singapore. In North American cities, the risk of a bubble has decreased,” the report states.

As regards Milan, demand from foreign investors, the steady formation of new households and the limited housing supply have underpinned price growth in recent years. Prices have risen by 9 per cent year-on-year, outpacing the growth in rents and incomes and making housing less affordable. The persistent shortage of supply continues to underpin valuations, but the financial viability of buying a property increasingly depends on expectations of future capital gains.

Following the sharp rise in recent years, ‘Milan has joined the ranks of cities with a moderate property risk. Prime central areas have benefited from growing international demand, making them less affordable for local buyers and fuelling interest in semi-central and outlying areas. Thanks to its role as a European hub for sectors such as technology, luxury goods and financial services, the city continues to attract talent and sustain demand for housing. However, expansion into the surrounding areas could help to curb price growth over time,” said Matteo Ramenghi, Chief Investment Officer at UBS WM in Italia.

Returning to the index, over the past year, in real terms, house prices, rents and incomes have remained broadly stable, although there have been significant differences between cities. Seoul, Lisbon, Madrid and Hong Kong recorded the most significant increases, with real house prices rising by around 10 per cent. At the other end of the scale, Vancouver and Toronto saw falls of around 10 per cent. Prices also fell in Frankfurt and Munich, albeit more moderately.
“Persistently high borrowing costs are likely to keep house price rises in check in the short term. In most cities, the annual costs associated with buying a 60-square-metre home, including mortgage interest and maintenance costs, exceed 40 per cent of a highly skilled worker’s gross income”, said Matthias Holzhey, lead author of the study and an economist at the Chief Investment Office of UBS Global Wealth Management, emphasising that “owning a property today costs significantly more than renting one, particularly in cities such as Munich, Hong Kong and Sydney”.