The 2024 edition of the Global Real Estate Index by UBS has been published and once again the high prices of Dutch housing in Amsterdam have landed the capital in the top 10 for cities at risk of a burst housing bubble. 

UBS Global Real Estate Bubble Index 2024

The Global Real Estate Bubble Index is released every year by UBS, a Swiss bank and financial services company, and determines which cities around the world have the highest housing bubble risk by investigating international real estate trends and prices. The following five key sub-indices are used to analyse house prices in 25 global cities:

• Price-to-income ratio
• Price-to-rent ratio 
• Change in mortgage to GDP ratio
• Change in construction to GDP ratio
• Relative price city-to-country indicator

These factors are then used to determine the city’s risk of a real estate bubble. A housing bubble develops when property prices rise at rapid rates, to the point where they reach unsustainable levels. If demand suddenly falls - from a rapid increase in housing supply or a dramatic fall in demand, for example - prices can drop sharply, putting the country at risk of an economic crisis. 

In this year’s housing bubble index, Miami, Tokyo and Zurich were ranked as the cities with the highest risk. 

Overpriced housing in Amsterdam puts Dutch housing market at risk

Amsterdam has once again managed to secure a spot in the top 10 of the housing bubble index, rising from 13th position in 2023 to seventh place this year. UBS reported that the rising housing prices are “propelling the bubble risk to high territory”.

For a skilled service worker in the Netherlands to buy a 60-square-metre flat near the Amsterdam city centre, they need to work for an average of eight years without spending any of their income. A flat of the same size would also need to be rented out for around 28 years to pay for the property. 

According to the study, the limited housing supply, growth in incomes and lower mortgage rates caused the Dutch housing market to bottom out quickly. This resulted in a real price hike of 7 percent for housing in Amsterdam when compared to prices last year, increasing the risk of a burst housing bubble.

10 cities with the highest housing bubble risk

The following cities are the most at risk of a housing bubble, according to the UBS Global Real Estate Bubble Index for 2024:

1. Miami
2. Tokyo
3. Zurich
4. Los Angeles
5. Toronto
6. Geneva
7. Amsterdam
8. Sydney
9. Boston
10. Vancouver

For the full report and the full ranking, visit the UBS website.