Miami’s sunlit condos may look enticing, but UBS says they carry the world’s highest housing bubble risk.
The Florida city outranks Tokyo and Zurich in this year’s Global Real Estate Bubble Index, highlighting how far prices have drifted from fundamentals.
Over the past 15 years, Miami has delivered the strongest inflation-adjusted price gains among major cities. Yet affordability has sunk to near-record lows and rents have failed to keep pace.
“Despite affordability for buyers being at near record lows, owner occupied prices have continued to diverge from rents,” UBS said.
Price-to-rent multiples now exceed even the extremes of the 2006 U.S. housing bubble. Rising insurance premiums and costly condo repairs are adding pressure.
“Miami’s coastal appeal and favorable tax environment continue to attract newcomers from the US West and Northeast, with real estate prices still well below those in New York and Los Angeles”
UBS expects growth to turn negative, though a sharp correction is unlikely given tax advantages, coastal appeal and resilient foreign demand.
Tokyo, meanwhile, sits in similar danger as home values have climbed 35% in five years, while rents and incomes barely budged.
The weak yen has lured offshore investors, cushioning prices, but affordability is eroding. Foreign buyers may sustain demand in central districts, but political backlash against overseas investment is intensifying.
In Zurich the prices have gone 60% higher than a decade ago, with values outpacing incomes fivefold. Low interest rates and a strong economy have kept demand alive, but price-to-rent ratios are now the world’s steepest.
“A turning point in the housing market is not in sight,” said UBS analyst.
UBS stresses that “bubble risk” signals mispricing, not an imminent crash.
History shows that affordability gaps and rent-price divergences often end in corrections. Miami, Tokyo and Zurich may be leading indicators of where exuberance in global property is most stretched.
Source :
https://www.investing.com/news/stock-market-news/miami-tops-bubblerisk-charts-as-property-cracks-widen-4256272
