If an apartment needs to be rented for more than 30 years to pay for it, the rule of thumb, according to a new UBS report, is that the local housing market is vulnerable to a correction if interest rates increase. And that’s not all: according to the report, price-to-rent multiples also reveal investors’ expectation of a market’s capital gains.
So here’s a list of the 20 cities — from largest price-to-rent multiples to the lowest — that reveal where investors’ are staking their hopes and, simultaneously, which markets are vulnerable to regulation and policy changes. The list is measured according to the number of years an apartment of the same size needs to be rented in order to pay for the apartment at its current value.
1. Zurich – 37 years
(Nick/Wikimedia Commons)
2. Munich – 37 years
(Stefan Kühn)
3. Stockholm – 35 years
(Benoît Derrier)
4. Vancouver – 34 years
(JamesZ/Flickr)
5. Paris – 33 years
(Taxiarchos228/Wikimedia Commons)
6. London – 33 years
(Pixabay)
7. Hong Kong – 33 years
(Flickr /Loïc Lagarde)
8. Singapore – 33 years
(Jirka/Matousek Flickr)
9. Milan – 32 years
(Conte di Cavour)
10. Geneva – 32 years
(James Cridland/Flickr)
11. Sydney – 29 years
(Shutterstock)
12. Frankfurt – 29 years
(Christian Wolf)
13. New York – 28 years
(Shutterstock)
14. Toronto – 27 years
(Wladyslaw/Wikimedia Commons)
15. Tokyo – 25 years
(Yodalica)
16. Amsterdam – 22 years
(Wikimedia Commons)
17. San Francisco – 22 years
(heyengel /Shutterstock)
18. Los Angeles – 19 years
(Andrew Zarivny /Shutterstock)
19. Boston – 16 years
(Shutterstock/ Marcio Jose Bastos Silva)
20. Chicago – 15 years
(Pixabay)
[UBS] — E.K. Hudson