Zurich homes market in highly overvalued territory, says UBS

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Investec
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Every quarter UBS, a bank, publishes its real estate bubble index, a report that covers real estate prices in 24 cities around the world.

In the third quarter of 2019, Munich was listed as the most overvalued housing market in the world.

Bubble risk was highest in Munich, Toronto, Hong Kong and Amsterdam. Frankfurt, Vancouver and Paris.

London moved out of bubble risk territory while Paris and Frankfurt entered the risk zone for the first time. Vancouver remained in bubble risk territory despite sharp price falls.

In addition, the report said that valuations were stretched in Zurich, London, San Francisco, Tokyo, Stockholm, Los Angeles, Sydney, Geneva and New York. Valuations in Sydney remained stretched despite sharp price falls.

The only cities covered by the report with fairly priced or undervalued property were Singapore, Boston, Milan, Dubai and Chicago. Dubai and Chicago were considered undervalued.

Zurich, which is now well ahead of Geneva on overvaluation, had the lowest rental yield of any of the cities in this report. Negative interest rates, which are driving the willingness of investors to accept low investment yields, are the key thing keeping property prices up in Zurich, according to UBS.

About Investec

Investec is a distinctive Specialist Bank and Asset Manager. We provide a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia, as well as certain other geographies. Investec’s strategic goals are motivated by the desire to develop an efficient and integrated business on an international scale through the active pursuit of clearly established core competencies in the group’s principal business areas.

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