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The following content is sponsored by Terzo
Published 2 weeks ago on December 8, 2025
By Jenna Ross
Key Takeaways
- Miami has the highest housing bubble risk in 2025, driven by an extreme price-to-rent gap.
- Tokyo and Zurich also show high risk due to investor demand and low financing costs.
Which housing markets could be headed for a correction? In cities like Miami, Zurich, and Tokyo, real estate prices are pushing past what local incomes and rents can justify. Amid these high prices, investors are watching closely for signs of instability.
This graphic, created in partnership with Terzo, shows the level of housing bubble risk for major cities globally. It’s part of our Markets in a Minute series, which features quick economic insights for executives.
What is a Real Estate Bubble?
A “bubble” is a large and long-term mispricing of an asset, which can only be identified in hindsight when the bubble bursts and prices plummet.
UBS examined five factors to gauge bubble risks:
- Home prices outpace local incomes
- Home prices rise faster than rents
- Mortgage lending expands too quickly
- Construction activity surges
- City prices far exceed national averages
These factors are correlated with previous housing bubbles and help determine risk levels, but they cannot predict if or when a correction will happen.
The Top Bubble Risks, Ranked
UBS analyzed 21 select cities globally. Miami has the highest bubble risk score. Although price growth has slowed, its price-to-rent ratio is now above 2006 bubble–era levels.
| Rank | City | Bubble Risk Category | Bubble Risk Score |
| 1 | Miami | High | 1.7 |
| 2 | Tokyo | High | 1.6 |
| 3 | Zurich | High | 1.6 |
| 4 | Los Angeles | Elevated | 1.1 |
| 5 | Dubai | Elevated | 1.1 |
| 6 | Amsterdam | Elevated | 1.1 |
| 7 | Geneva | Elevated | 1.1 |
| 8 | Toronto | Moderate | 0.8 |
| 9 | Sydney | Moderate | 0.8 |
| 10 | Madrid | Moderate | 0.8 |
| 11 | Frankfurt | Moderate | 0.8 |
| 12 | Vancouver | Moderate | 0.8 |
| 13 | Munich | Moderate | 0.6 |
| 14 | Singapore | Moderate | 0.6 |
| 15 | Hong Kong | Low | 0.4 |
| 16 | London | Low | 0.3 |
| 17 | San Francisco | Low | 0.3 |
| 18 | New York | Low | 0.3 |
| 19 | Paris | Low | 0.3 |
| 20 | Milan | Low | 0.0 |
| 21 | São Paulo | Low | -0.1 |
Source: UBS, data collected through Aug. 28, 2025.
Tokyo follows closely, driven by persistent price increases despite only modest rent and income gains.
Zurich rounds out the top three, with property values rising five times faster than incomes over the past decade. The city now has the world’s highest price-to-rent multiple—it would take 43 years of rent to buy an apartment of the same size.
While these cities remain magnets for investment and migration, affordability is stretched thin. In Tokyo and Zurich, sustained investor demand and low financing costs have fueled further appreciation.
Year-Over-Year Shifts
Some cities have seen notable shifts in risk. Toronto and Hong Kong had the biggest declines in their risk scores, thanks to declining real prices and tighter regulations.
On the other hand, Dubai and Madrid climbed the ranks. Dubai, in particular, has experienced a sharp price rebound alongside robust rent growth. Because prices are still affordable relative to other major global cities, optimistic investors are hoping for strong future returns.
Why Housing Bubble Risks Matter
For executives and asset managers, these rankings serve as a warning. In cities with high bubble risk, a price correction could sharply reduce the value of real estate holdings. Investors with concentrated exposure to markets like Miami or Zurich may want to reassess their risk profile.
Likewise, corporate location planning and real estate strategy may need to adapt. As affordability erodes, workforce retention could suffer as employees move to less pricey areas.
Great insights, like these housing bubble risks, start with great data. NirvanAI is an all-in-one AI system that turns your company’s contract data into actionable information.
Original:
https://www.visualcapitalist.com/sp/ter01-the-biggest-housing-bubble-risks-globally/#google_vignette
