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Vancouver jumps from fourth to first on housing bubble index

(NEWS 1130 File Photo)
Summary

The Swiss bank UBS says house prices in cities within the bubble risk zone have jumped 50 per cent since 2011

London and Stockholm round out the top three on the list

VANCOUVER (NEWS 1130) – Housing bubbles are a risk in six cities around the world, but none more so than Vancouver in the view of Swiss bank UBS. The city was ranked fourth in the 2015 report, just behind Sydney.

“House prices of the cities within the bubble risk zone have increased by almost 50 per cent on average since 2011,” says the bank, while other financial centers have had gains of less than 15 per cent.

UBS says the gap “is out of proportion to differences in local economic growth and inflation rates.” The report cites high demand from foreign investors as one factor contributing to bubble risk, along with low mortgage rates. Second on the bubble list is London, followed by Stockholm, Sydney, Munich and Hong Kong.

“Weak economic foundations of the latest price boom make the housing markets in those cities vulnerable,” according to the bank. It adds a “shift in investor sentiment or a major supply increase could trigger a rapid decline in house prices.” And it concludes investors in so-called overvalued markets shouldn’t expect any real price appreciation in either the near future or long run.