Introduction to the UBS Global Real Estate Bubble Index 2025
The global real estate market is experiencing one of its most significant price increases in history, as highlighted by the UBS Global Real Estate Bubble Index 2025. This report analyzed housing prices in 21 major global cities, including Miami, Tokyo, and Zurich. Dubai and Madrid saw the highest increase in housing bubble risk compared to the previous edition.
Understanding Housing Bubble Risk Categories
The housing bubble risk categories are defined by scores: less than 0.5 indicates a low risk, between 0.5 and 1.0 is moderate, from 1.0 to 1.5 is elevated, and above 1.5 signifies a high risk.
Miami Leads with the Highest Housing Bubble Risk
Miami tops the list as the city with the highest housing bubble risk among the residential markets analyzed, with a score of 1.73, surpassing the threshold of 1.5. This is due to a combination of record-breaking prices, low affordability, and growing disconnect from rents and income.
- Miami has seen the greatest accumulation in 15 years, though there has been a slowdown in the past year due to rising inventories and high maintenance and insurance costs.
- In the last five years, the accumulated increase has been approximately 50%, with the highest price growth adjusted for inflation among all cities.
Tokyo and Zurich Follow Closely
Following Miami, Tokyo has a score just above the 1.59 threshold, while Zurich completes the top three with a score of 1.55.
Tokyo’s real estate prices have risen by 35% in the last five years, significantly outpacing rent and income growth of single-digit rates. With a score of 1.59, Tokyo remains in the high-risk zone.
- Tokyo’s housing demand has been driven by loose monetary policy and foreign capital influx, boosting central neighborhoods. However, declining demographics and an aging population may limit further price increases.
Zurich’s Housing Market Situation
Zurich, with a score of 1.55, has experienced around 60% price growth in recent years, while incomes have risen at a fifth of that pace. This places Zurich in the high-risk category.
Regulatory Measures to Moderate Housing Markets
In response to these trends, several cities have implemented regulatory measures to moderate their housing markets. These include additional taxes, restrictions on foreign purchases, and rent controls, as seen in Vancouver, Sydney, Amsterdam, Paris, New York, Singapore, and London.
Understanding Housing Bubble Risk
Housing bubble risk arises when housing prices deviate from economic fundamentals, primarily driven by speculative demand or external factors unrelated to income, employment, or buyer payment capacity. This phenomenon can lead to market imbalances that may result in substantial price drops if not addressed.
Key Questions and Answers
- What is the UBS Global Real Estate Bubble Index 2025? It’s a report analyzing housing prices in 21 major global cities, identifying areas with high housing bubble risk.
- Which cities have the highest housing bubble risk? Miami, Tokyo, and Zurich are at the top of the list according to this index.
- What factors contribute to housing bubble risk? Factors include record-breaking prices, low affordability, and growing disconnect from rents and income.
- How are cities responding to housing bubble risks? Cities like Vancouver, Sydney, Amsterdam, Paris, New York, Singapore, and London have implemented regulatory measures to moderate their housing markets.
Despite the general cooling of global real estate markets, significant risks persist in various cities. Factors such as affordability, regulatory policies, migration trends, and central bank decisions will be crucial in determining price stability over the coming years.
