A study conducted by UBS Bank confirmed that the risk of a real estate bubble has declined after a “general correction” in 25 major cities around the world, with the exception of Tokyo and Zurich.
It expected prices to continue to decline if interest rates remained high.
Imbalances in real estate markets have declined sharply, due to the sharp rise in interest rates, according to the Swiss bank, which publishes a study every year on the risks of inflation in 25 major financial centers, including New York, London and Singapore.
Real estate prices fell by an average of 5% in real terms between mid-2022 and mid-2023 in the 25 cities included in the study.
The decline was particularly noticeable in Frankfurt and Toronto, the two cities where prices were the highest in a ranking conducted last year. Prices there have fallen by 15% over the past four quarters, according to the study.
“The abrupt end to the low interest rate environment led to the fall of the sand palace,” the study authors said, after a decade of strong growth that pushed prices to “sharp heights.”
The previous ranking, conducted in 2022, showed the risk of real estate bubbles in nine cities, including Munich, Hong Kong, Vancouver, Amsterdam and Tel Aviv.
It decreased to only two in 2023 in Zurich, where the main office of UBS Bank is, and Tokyo, which is still threatened by the market boiling, according to the study.
In the face of this, the bank estimates that “an additional decline in prices is possible if interest rates remain at their current high levels.” However, the bank confirms that prices may rise again if there remains a shortage of housing for sale.
TRT Arabic – Agencies
2023-09-20 16:08:45
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