The Real Deal New York

These are the world’s biggest housing market bubbles

Hong Kong is the most overvalued; Chicago is just the opposite
September 27, 2018 09:47AM

The flag of Hong Kong, the Sydney Opera House in Australia, the Statue of Liberty in New York, and a house in a bubble (Credit: iStock and Wikipedia)

Here we go again. Ten years after the financial crisis, many major housing markets worldwide are overvalued or at risk of a bubble.

Chicago is the only undervalued market among UBS Group’s 20-city index, Bloomberg reported. Milan, Singapore and Boston are fairly valued.

Ten cities — including New York, Los Angeles, San Francisco, Boston and Sydney, Australia — were deemed overvalued, the report said. Last year, New York was fairly valued. Miami was not ranked.

At the same time, six cities are at risk of a bubble, with Hong Kong taking the top spot. Signs of a bubble include real estate prices rising faster than incomes and other imbalances like too much lending and construction activity, the report said.

Despite the rising values, the situation globally is not same as preceded the last bubble, which led to the 2008 crash.

“Although many financial centers remain at risk of a housing bubble, we should not compare today’s situation with pre-crisis conditions,” Mark Haefele, chief investment officer at UBS Global Wealth Management, told Bloomberg.

There are no signs of excessive lending or construction, the report said. And outstanding mortgage volumes are growing at about half of the rate of the pre-crisis period. [Bloomberg] — Meenal Vamburkar