Is a Global Housing Bubble About to Burst?

“It’s unlikely, according to a report by the Swiss bank UBS, but some markets are more vulnerable than others.

 

Despite fears of valuation bubbles emerging on Wall Street and in the residential housing market, homeowners and investors should remain calm, at least according to a new report from UBS, the Swiss bank and investment firm. A bubble-driven real estate crash like the one in 2007 looks unlikely — except maybe in a few overheated markets.

 

Housing bubbles typically form when prices soar to unsustainable heights because of hype and speculation rather than real economic conditions. While bubbles can be tough to spot until they pop, UBS’s report examines the conditions in 21 major global markets and uses known indicators to assess their risk.

 

These include home and rent prices outpacing what local incomes can afford, irresponsible lending practices, and too much construction activity.

 

Housing prices worldwide (adjusted for inflation) have held firm over the past year, while a dearth of new construction should keep supply low and steady, creating stable investment markets. These are good signs for staving off a bubble — though it’s better news for homeowners, who want a stable investment, than for buyers who can’t afford to enter the market.

 

Take San Francisco and New York. They’re notoriously costly, yet their markets don’t appear overheated. First, prices have already started to cool on an inflation-adjusted basis.

Second, back-to-office mandates from A.I. start-ups and finance firms have kept high-earning workers rooted in the coastal cities. This should keep demand for housing robust, and these well-compensated workers can handle the cost.

 

Internationally, Paris and London also are at low risk. Prices have begun to sag in the European capitals, but a lack of new construction will keep supply low, preventing them from cratering.

 

So which cities are at risk? For starters, ones where real estate prices ballooned by more than 25 percent over the last five years. Leading the pack is Miami, which (along with Florida more broadly) was the epicenter of the Great Recession of 2007. Nearly two decades later, the price-to-rent ratio in Miami — a metric used to compare the cost of buying versus renting — has surpassed peak levels from 2006, meaning the monthly cost of renting is lower than buying. This indicates that homes for sale are excessively overpriced, which could precipitate a collapse. Additionally, the Miami market is largely driven by investors, who typically chase quick gains that can inflate prices and set off a value crash.

 

Los Angeles wasn’t far behind among cities at risk. Although it suffers from a drastic housing shortage, vacancies are rising, according to UBS — a sign that prices are not sustainable.” [1]

 

1. Is a Global Housing Bubble About to Burst?: Calculator. Echikson, Julia.  New York Times (Online) New York Times Company. Nov 20, 2025.