UBS: This City’s at Greatest Risk of a Bubble
European cities in particular now exceed "fair valuation," the report says. London ranks as the most overvalued market in the world—and most at risk for such a bubble—trailed by Hong Kong, Amsterdam and Frankfurt, according to UBS' Global Real Estate Bubble Index.
London home prices are up 6% from their 2007 peak, decoupled from the rest of the UK and local household earnings. UBS blames foreign investors seeking a financial safe haven along with a growing domestic population to be the cause of rising prices, reports CNBC.
Surprisingly, in spite of record-breaking sales and enormous interest from wealthy buyers abroad, most US real estate was found to be "mostly fair-valued," with S.F. the lone exception (due to the fast-growing economy of Silicon Valley). Chicago, meanwhile, was found undervalued relative to its own history, the report said. [CNBC]