UBS Bubble Index Ranks Zurich and Tokyo at Highest Real Estate Risk Worldwide

Global bubble rankings and methodology

The twelfth edition of the UBS Global Real Estate Bubble Index evaluated residential housing markets across 23 metropolitan areas worldwide. The analysis evaluates deviations between property purchase prices, rental yields, household income, economic output, construction volumes, and household debt levels. According to the study, overall global bubble risk remained largely unchanged year on year, but severe imbalances concentrated in specific markets. Zurich took first place globally with an index score of 1.69, followed by Tokyo at 1.54, making them the only two cities in the highest risk category. Miami, which held the highest index value in the previous two editions, fell back into the elevated risk tier alongside Geneva, Dubai, Seoul, and Lisbon.

Zurich market overheating and affordability metrics

In Zurich, real residential property prices rose by 4.6% over the past year, while real rental rates declined slightly. Over the past two decades, inflation-adjusted apartment prices in the Swiss financial centre climbed by almost 140%, far outpacing a 40% rise in rents and a 30% gain in incomes. A standard apartment purchase in Zurich now requires approximately 46 years of rental payments, marking the highest price-to-rent ratio among all 23 analyzed cities, followed by Geneva at 40 years. Strong demand from high-earning foreign specialists in software and artificial intelligence, combined with a residential vacancy rate of 0.11%, has kept inventory scarce. Affordability constraints mean purchasing a 60-square-metre flat near the centre requires roughly eight years of income for a skilled professional, compared to 15 years in Hong Kong.

Despite current valuations, residential real estate is likely to continue to provide protection against inflation in most cities over the medium term.

Corrections across German and European centres

German metropolitan markets have experienced significant price adjustments following interest rate increases by central banks. Frankfurt and Munich, which ranked among the highest-risk cities globally in 2022, have dropped into the moderate risk category alongside Amsterdam, Madrid, and Milan. Inflation-adjusted purchase prices in both German cities stand up to 25% below their peak levels from 2021 and 2022. Frankfurt recorded a 3% price decline in 2025, though high borrowing costs and construction expenses continue to suppress new development despite strong rental demand from migration and smaller household sizes.

Adjusted for inflation, prices are up to 25 percent below the peak levels of 2021 and 2022.

The German residential real estate market has reduced a significant portion of the overvaluations from the low-interest phase.

Shifting risk tiers and global financing strain

The 2026 index documented the strongest growth in market imbalances across Lisbon and Seoul, with additional risk increases measured in Milan, Hong Kong, Madrid, and Dubai. Conversely, the lowest bubble risks globally were recorded in Paris, London, New York, San Francisco, and Sao Paulo. High interest rates have increased carrying costs worldwide, with mortgage interest and maintenance for a 60-square-metre property absorbing over 40% of gross income for top earners in most cities. UBS also found that homeownership failed to provide effective inflation protection in over half of the surveyed cities during the past five years, with markets in the top risk category in 2021 experiencing subsequent real price declines averaging roughly 15%.