Majority of the most attractive housing markets in the world are overpriced, according to Mark Haefele, global chief investment officer at UBS.
“Among the 15 international cities we analysed, only Chicago appears undervalued,” he said in a report.
Boston and New York were considered fair-valued, which leaves 12 of the 15 cities surveyed by UBS as overvalued.
Examples of two most extreme overvalued housing markets are Hong Kong and London.
Real estate prices in Hong Kong are almost 200 percent above 2003 levels despite stagnant income and rent while London saw home prices climb 40 percent since 2013 – placing the two cities at risk of a housing bubble.
“Real estate is not only illiquid but also offers poor value in many major global cities … property markets look frothy in many cities of the world,” noted Haefele.
“The results indicate an elevated risk of a significant correction in housing prices in London and Hong Kong to name just two examples.”
Meanwhile, home prices in Zurich, Hong Kong, Vancouver, Singapore, Geneva, London, Paris and Sydney are vulnerable to “sharp corrections”, added the report.
“We have recommended other destinations for money currently earning meager yields in government bonds, such as hedge funds,” shared Haefele.
“An alternative we recommend to clients looking for longer-term investments is exposure to structural trends, such as cancer therapeutics, clean air, or emerging market healthcare.”
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
