UBS Global Real Estate Bubble Index 2026: Zurich and Tokyo top housing bubble risk
23 SEPT, 2026
By Joanna Piwko from RankiaPro Europe
TL;DR: Zurich (1.69) and Tokyo (1.54) are the only cities at high bubble risk in the UBS Global Real Estate Bubble Index 2026. Miami slips to elevated risk alongside Dubai, Seoul, Geneva and Lisbon, while London, Paris and New York sit in low-risk territory.
Zurich has overtaken Miami at the top of the UBS Global Real Estate Bubble Index 2026, published on 22 September 2026. Only Zurich and Tokyo are now classified as high risk among the 23 cities analysed in the index's 12th edition, with Lisbon and Seoul included for the first time.
Overall risk levels are broadly stable compared with 2025. Across the sample, inflation-adjusted home prices rose by an average of just 0.5% year over year, down from 1.4% in mid-2025, as slightly higher financing costs eroded affordability while housing shortages in many cities continued to support prices.
Which cities face the highest housing bubble risk in 2026?
UBS classifies markets by score: low risk below 0.5, moderate between 0.5 and 1.0, elevated between 1.0 and 1.5 and high above 1.5. Miami, top of the past two editions, is now elevated risk, alongside Dubai, Seoul, Geneva and Lisbon.
| Rank | City | Score | Risk category | Score vs. 2025 | Real price change, last year (%) |
|---|---|---|---|---|---|
| 1 | Zurich | 1.69 | High | Up | +4.6 |
| 2 | Tokyo | 1.54 | High | Down | +6.0 |
| 3 | Miami | 1.41 | Elevated | Down | –1.6 |
| 4 | Dubai | 1.16 | Elevated | Up | +0.4 |
| 5 | Seoul | 1.13 | Elevated | Up | +11.0 |
| 6 | Geneva | 1.12 | Elevated | Up | +2.7 |
| 7 | Lisbon | 1.04 | Elevated | Up | +10.2 |
| 8 | Amsterdam | 0.95 | Moderate | Down | –2.0 |
| 9 | Madrid | 0.86 | Moderate | Up | +9.0 |
| 10 | Los Angeles | 0.69 | Moderate | Down | –3.2 |
| 11 | Sydney | 0.68 | Moderate | Down | –4.4 |
| 12 | Frankfurt | 0.64 | Moderate | Down | –3.2 |
| 13 | Toronto | 0.63 | Moderate | Down | –10.7 |
| 14 | Vancouver | 0.62 | Moderate | Down | –9.7 |
| 15 | Munich | 0.61 | Moderate | Down | –3.7 |
| 16 | Hong Kong | 0.61 | Moderate | Up | +8.7 |
| 17 | Singapore | 0.54 | Moderate | Down | +1.0 |
| 18 | Milan | 0.50 | Moderate | Up | –0.4 |
| 19 | Paris | 0.33 | Low | Up | –1.6 |
| 20 | London | 0.32 | Low | Down | –1.1 |
| 21 | New York | 0.28 | Low | Down | –0.9 |
| 22 | San Francisco | –0.02 | Low | Down | +1.4 |
| 23 | São Paulo | –0.24 | Low | Down | –0.7 |
In Europe, Amsterdam, Madrid, Frankfurt, Munich and Milan fall into the moderate category, while London and Paris score as low risk. Outside Europe, New York, San Francisco and São Paulo are also low risk, with São Paulo's score of –0.24 the lowest in the sample.
Why wealth, not income, is driving prime housing demand
In the report's editorial, Claudio Saputelli, Head Swiss & Global Real Estate, and Matthias Holzhey, Senior Real Estate Economist at UBS CIO GWM, argue that accumulated financial wealth has become an increasingly dominant driver of housing demand. Prime residential segments are outperforming broader markets in many cities.
Strong equity gains have lifted the purchasing power of affluent households, enabling larger deposits and, in some cases, cash purchases. AI-related investment is adding substantial but highly concentrated wealth – a divergence UBS sees most clearly in San Francisco and Seoul, echoing the AI-driven rally in semiconductors.
This matters for risk assessment. As prices disconnect from local incomes, traditional affordability metrics may become less reliable, and overheating is increasingly concentrated in prime districts. Lower reliance on debt may reduce systemic risk, but UBS warns that the gap between wealth-driven and income-driven segments creates new challenges for market stability.
The divergence shows in the data. Over the past five years, real prices in elevated- and high-risk cities rose nearly 30% on average, against 15% for rents and only about 8% for incomes. In moderate- and low-risk cities, inflation-adjusted prices fell by nearly 10%.
European housing markets move in different directions
Eurozone housing markets have evolved unevenly over the past year. Imbalances widened in Lisbon, Madrid and Milan, and Paris recorded a modest increase in its score, while bubble risk receded in Frankfurt, Munich and Amsterdam.
Zurich and Geneva: low rates keep Switzerland at the top
Zurich's score rose to 1.69. Over the past two decades, real house prices in Zurich have risen by nearly 140%, far outpacing rental growth of 40% and income growth of 30%. In the year to 2Q26, real prices gained a further 4.6% while real rents fell 0.6%.
UBS sees a significant near-term correction as unlikely, citing Zurich's pull for IT and AI talent, vacancy rates close to zero and owner-occupied listings roughly two-thirds below their level 20 years ago. However, the market increasingly depends on persistently low interest rates, and its price-to-rent ratio is the highest in the study.
Geneva (1.12) sits in elevated territory. Prices have risen 3% since mid-2025, supported by low financing costs and robust employment and population growth. Spending cuts by international organisations are a risk to the outlook, while rents have stagnated despite low vacancy rates.
Southern Europe: Lisbon, Madrid and Milan
Lisbon enters the index at 1.04. Real house prices have risen by nearly 7% a year over the past decade – the fastest rate among the cities analysed – and by another 10% since mid-2025. UBS notes key growth drivers are weakening, with population growth turning negative and rental growth stalling.
Madrid (0.86) remains moderate but is climbing. Prices are up 9% year over year, outpacing rents and incomes, as foreign demand, household formation and limited supply offset the end of the Golden Visa programme. Growth slowed in spring 2026 as financing costs and tighter short-term rental rules weighed on demand.
Milan (0.50) sits at the lower edge of the moderate band. Real home prices have been broadly stable since 2021, supported by international buyers in prime central districts, while the city's expansion into outer districts is shifting demand growth toward the suburbs.
Germany, Amsterdam, London and Paris: correction and stagnation
Frankfurt (0.64) and Munich (0.61) remain moderate as prices adjust to higher mortgage rates, with real declines of 3.2% and 3.7% over the past year. Frankfurt's real prices are nearly 25% below their 2021 peak, while Munich's housing completions fell to a 15-year low in 2025.
In Amsterdam (0.95), rent caps, higher wealth taxes and buy-to-let restrictions have pushed landlords to sell, increasing supply for owner-occupiers. Real prices fell 2% over the past year and are around 10% below their peak.
London (0.32) has weakened for a fifth consecutive year and is now in low-risk territory. Real prices are more than 15% below 2021 levels, and in 2025 the city recorded its first population decline since the late 1980s, excluding the pandemic years.
Paris (0.33) has seen broader home prices fall 25% in real terms since 2021, even as prime demand stays resilient. Rent controls, energy upgrades and short-term rental restrictions weigh on investment demand, and France's fiscal concerns continue to dampen investor confidence.
Price-to-income and price-to-rent: where valuations are most stretched
Buying a 60-square-metre apartment near the city centre is beyond the reach of the average skilled service worker in most cities covered. Hong Kong remains the least affordable market, requiring around 15 years of average income, while price-to-income ratios exceed 10 in Tokyo, Paris, London and Seoul.
Compared with 2021, before global rates surged, a skilled service worker can afford about one-third less space. At current borrowing costs, UBS sees prevailing price levels as increasingly difficult to sustain, particularly in New York, Sydney, São Paulo and London.
On price-to-rent, Zurich leads at 46, followed by Geneva at 40, with Munich, Frankfurt and Hong Kong above 30. High multiples reflect expectations of price gains and lower rates; if those expectations weaken, owners in these markets could face significant capital losses. São Paulo, Dubai and the US cities rank among the lowest.
Direct ownership costs exceed rents in every city in the study. UBS's broader user-cost measure, which adds a risk premium and expected capital gains, is substantially above rents in Hong Kong, Vancouver and Los Angeles, but below rents in Madrid, Dubai and Zurich, where ownership looks relatively attractive.
Outlook: inflation protection, but financing costs still bite
In the near term, UBS expects elevated – and in many cases rising – financing costs to keep weighing on price growth. In most cities, the direct cost of owning a 60-square-metre property exceeds 40% of a highly skilled worker's income, and the case for buying rather than renting depends on future appreciation.
History offers a warning. Markets flagged as high risk in 2021 saw the sharpest declines, averaging roughly 3% a year in real terms. Cities with above-average inflation recorded real price falls of 1.5% a year, while those with below-average inflation achieved real gains of 2.5%.
Over the medium term, however, UBS expects housing in most cities to provide inflation protection. Rents have broadly kept pace with – and often outpaced – income growth over the past five years, and persistent supply constraints continue to underpin demand for urban housing.
What the index means for fund selectors and allocators
For professional investors, the 2026 edition points to a market of widening dispersion, where city, segment and financing conditions matter more than broad regional exposure. The findings sit alongside European real estate's resilience amid geopolitical tensions, which rests on similar supply-shortage arguments.
Factors UBS identifies as supportive:
- Supply constraints: structural housing shortages in many urban markets continue to support prices and rents.
- Safe-haven demand: UBS expects demand to rise for politically stable markets with trophy assets amid geopolitical and inflation concerns.
- Lower leverage: a greater role for wealth rather than debt may reduce systemic financial risks.
Factors that argue for caution:
- Rate sensitivity: high price-to-rent markets such as Zurich rely on persistently low financing costs.
- Wealth concentration: prime segments may decouple further from local incomes, weakening traditional valuation signals.
- Timing uncertainty: the index does not predict whether or when a correction will occur; shifts in macro conditions, sentiment or supply could act as triggers.
The UBS Global Real Estate Bubble Index 2026 confirms that bubble risk has not disappeared – it has concentrated. Zurich and Tokyo stand alone in high-risk territory, while Lisbon, Seoul and Madrid are heating up and former hotspots such as London, Toronto and Frankfurt continue to correct.
For allocators, the key message is that affordability and income metrics alone may understate risk where wealth-driven demand dominates. Residential exposure increasingly calls for city- and segment-level due diligence, with particular attention to financing assumptions in the markets most dependent on low rates.
Source: UBS Global Real Estate Bubble Index 2026, UBS Chief Investment Office GWM. Data collected through 26 August 2026.
This article is for informational purposes only and does not constitute investment advice. Past performance is not an indication of future returns.
