Vancouver’s property price growth has been fuelled by an influx of Chinese buyers, and now they are at the peak of their unsustainable house price bubble, according to the Swiss bank. Economists at UBS compared house prices across 18 cities and found that Stockholm, Sydney, Munich and Hong Kong are also in the miiddle of their own property bubbles, with house prices rising by up to an average of 50% in these countries since 2011.
The bubble report claims that every city in Europe, apart from Milan, sufferes from an over-valued property market. This is mainly due to the low interest rates that have lingered throughout Europe ever since the Euro debt crisis at the start of the decade.
UBS Wealth Management’s Claudio Saputelli said: “What these cities have in common are excessively low interest rates, which are not consistent with the robust performance of the real economy. When combined with rigid supply and sustained demand from China, this has produced an ideal setting for excesses in house prices.”
The bubble report aceepts that a bubble cannot be proven conclusively until it bursts. However, it does warn that: “the situation is fragile for the most overvalued housing markets. A sharp increase in supply, higher interest rates or shifts in the international flow of capital could trigger a major price correction at any time.”