Housing bubble risk levels in major cities around the world
What is a real estate bubble
A "bubble" is a substantial and sustained overvaluation of an asset, which can only be confirmed in hindsight, once the bubble bursts and prices fall sharply.
In August 2025, UBS analyzed five factors to assess bubble risk:
These factors correlate with previous housing bubbles and help determine the level of risk, but they cannot predict whether a correction will occur or when it might happen.
In August 2025, UBS analyzed five factors to assess bubble risk:
- Home prices outpacing local income growth.
- Home prices rising faster than rents.
- Mortgage lending growing too quickly.
- Construction activity increasing sharply.
- City prices significantly exceeding national averages.
These factors correlate with previous housing bubbles and help determine the level of risk, but they cannot predict whether a correction will occur or when it might happen.
Ranking of cities with the highest bubble risk
1. Miami has the highest bubble risk score. Although price growth has slowed, the gap between home values and rents exceeds 2006 levels, when the bubble emerged.
2. Tokyo follows, driven by persistent price growth despite modest increases in rents and incomes.
3. Zurich rounds out the top three: over the past decade, property values in the city have grown five times faster than incomes. Zurich now has the highest price-to-rent ratio in the world – it would take 43 years of rent payments to buy a comparably sized apartment.
While these cities continue to attract investment and migrants, housing affordability is becoming increasingly constrained. In Tokyo and Zurich, resilient investor demand and low financing costs continue to drive prices higher.
2. Tokyo follows, driven by persistent price growth despite modest increases in rents and incomes.
3. Zurich rounds out the top three: over the past decade, property values in the city have grown five times faster than incomes. Zurich now has the highest price-to-rent ratio in the world – it would take 43 years of rent payments to buy a comparably sized apartment.
While these cities continue to attract investment and migrants, housing affordability is becoming increasingly constrained. In Tokyo and Zurich, resilient investor demand and low financing costs continue to drive prices higher.
Shifts from the previous year
Some cities have seen notable shifts in risk level. Toronto and Hong Kong recorded significant declines in risk scores, thanks to falling real prices and tighter regulation. Dubai and Madrid, on the other hand, climbed in the rankings. Dubai saw a sharp rise in prices alongside a steady increase in rents. Since prices remain affordable relative to other major global cities, optimistic investors are hoping for strong returns in the future.
Why housing bubble risks matter
For business leaders, asset managers, and retail investors, these rankings serve as a warning sign. In cities with high bubble risk, a price correction could lead to a sharp decline in property values. Investors with holdings concentrated in Miami or Zurich should reconsider their risk profile. Similarly, companies may need to reassess their office location plans and real estate strategies. As housing affordability declines, retaining employees could become a challenge, as professionals begin relocating to more affordable regions.
See also
Periodic table of AI startups – 14 company categories
Classification of 305 AI startups that raised funding between February 2025 and February 2026 by funding, count, annual growth, momentum trend, and ecosystem.
Funding and outcomes analysis of 100,000 startups
A study of model data for predicting IPO, acquisition, or shutdown outcomes. The approach used are applicable to identifying the true drivers of startup success.
25-year risk-return analysis of investment portfolios
Risk and return are directly related: the higher an asset's potential profit, the higher the probability of financial loss. Safe instruments deliver minimal returns.
The materials presented in this section are not individual investment recommendations. The financial instruments mentioned in this section may not be suitable for you and may not correspond to your investment profile, financial situation, investment experience, knowledge, investment objectives, or attitude toward risk and return.
This information does not constitute a public offer, proposal, or invitation to invest in funds and/or strategies, or to buy or sell securities, or to enter into transactions with them.
Past investment performance does not determine future returns. This is not an advertisement for securities. Before making an investment decision, the investor must independently assess the economic risks and benefits, as well as the tax, legal, and accounting consequences of the transaction, and their willingness and ability to accept such risks.
© 2016—2026 Invest Adviser
This information does not constitute a public offer, proposal, or invitation to invest in funds and/or strategies, or to buy or sell securities, or to enter into transactions with them.
Past investment performance does not determine future returns. This is not an advertisement for securities. Before making an investment decision, the investor must independently assess the economic risks and benefits, as well as the tax, legal, and accounting consequences of the transaction, and their willingness and ability to accept such risks.
© 2016—2026 Invest Adviser
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