In recent years, in many major cities of the world there has been a decrease in real housing prices, which is associated with increasing interest rates and weakening of demand in the real estate market. The situation is also aggravated by rigid financing conditions, as well as growing construction costs, which leads to a slowdown in market activity. For example, in megacities such as Hong Kong, London and New York, the risks of housing bubbles are reduced. However, at the same time, the high levels of demand for luxury objects and active movements in the stock market continue to heat fears about possible bubbles in cities such as Miami and Los Angeles.
The analysis based on the UBS Global Real Estate Index for 2024 shows that Miami is at the top of the list of cities with the highest risk of bubbles in the housing market. Since the end of 2019, real housing prices in this city have increased by almost 50%, which has significantly increased the ratio of income price. This fact indicates that buyers are faced with fierce competition for limited luxurious objects located along the embankment. In addition, the relative accessibility of Miami compared to other large cities of the United States, the lack of tax on individuals and an attractive climate contribute to an increase in the demand for real estate, which in turn enhances the risks of forming bubbles in this market.
The UBS study methodology includes a number of key factors, such as the ratio of income price, the price of the price for lease and changes in the ratio of mortgage loan to gross domestic product (GDP). These parameters help to form a complete idea of the state of real estate markets in 25 large cities of the world and determine the likelihood of a significant price adjustment due to distortion in these markets. As a result, despite the general tendency to reduce prices in some cities, specific markets, such as Miami, continue to represent potential risk zones for investors and buyers.
Tokyo, one of the most inaccessible cities in the world, holds high positions in ratings due to its unique economic situation. The ultra-codon monetary policy and consistent economic stability contributed to a significant increase in real estate prices, which makes the city especially unattractive for new buyers. Last year, the cost of an apartment with an area of 646 square feet in Tokyo was amazingly high - 15 times higher than the average salary of a qualified employee. These figures put Tokyo in the first place in the inaccessibility of housing, ahead of such megalopolises as London and New York.
Comparatively, Dubai demonstrates another trend without falling into the bubble territory, but continuing to observe the increase in housing prices. From the 2nd quarter of 2023 to the 2nd quarter of 2024, prices increased by 17%, which became the highest indicator among the analyzed cities. This is due to the record volume of transactions and a significant increase in the population, since Dubai continues to attract investors and buyers seeking to access its status of the global financial center.
Against the backdrop of this, a number of other cities, such as London, Hong Kong, Paris and Toronto, demonstrates a decrease in bubble risk. There is a fall in real housing prices, which may indicate the correction of the market after the phase of rapid growth. These changes in the economic picture of many large cities emphasize the variety of approaches and conditions affecting the real estate market around the world.
