Investing.com -- Miami now holds the highest real estate bubble risk among global cities, according to the UBS Global Real Estate Bubble Index.
The annual report, which tracks the vulnerability of property markets to potential price corrections, shows that the risk of a housing bubble has slightly decreased overall for the second consecutive year, according to the bank.
However, while imbalances have lessened in Europe and remained stable in Asia-Pacific, UBS said they have increased in the U.S., with Miami leading the pack.
In addition to Miami, cities like Tokyo and Zurich also rank high for bubble risk, though Zurich's score has dropped significantly compared to last year, UBS noted.
Other cities that are said to be facing elevated risks include Los Angeles, Toronto, and Geneva. Meanwhile, moderate bubble risks are observed in cities like Amsterdam, Sydney, and Boston.
Notably, Dubai saw the largest increase in bubble risk among the cities analyzed, underscoring its hot real estate market, said UBS.
"According to the Index, a low risk of a real estate bubble is evident in San Francisco and New York," said UBS. "In Europe, after further declines in the index score, London, Paris, Stockholm, and Milan fall into this low-risk category too. Bubble risk in Warsaw remains low as well. São Paulo shows the lowest bubble risk among the cities analyzed."
The bank highlights that inflation-adjusted housing prices across the analyzed cities are, on average, 15% lower than in mid-2022, driven by rising global interest rates.
They note that some cities that previously faced high bubble risks, such as Frankfurt, Munich, and Stockholm, saw real prices fall by over 20%.
Despite these corrections, markets in Dubai and Miami have continued to surge, while "strong corrections" were still observed in Paris and Hong Kong, while cities like Vancouver, Sydney, and Madrid saw real price increases of more than 5% compared to last year.