Munich and Frankfurt Have the Highest Real Estate Bubble Risk in 2020

Munich and Frankfurt Have the Highest Real Estate Bubble Risk in 2020
Munich and Frankfurt Have the Highest Real Estate Bubble Risk in 2020

Categories :

By citiesabc resources - Nov 04, 2020

Home values in leading markets continue to grow, despite the economic downturn caused by the coronavirus pandemic. Housing prices in many major cities are overheating, which increases the risk of a real estate bubble.

According to data presented by StockApps, Munich and Frankfurt top the list of cities with the biggest risk of the housing bubble in 2020. With a real estate bubble index score of 2.35, Munich represents the city with the highest housing bubble risk worldwide.

European Cities Have the Biggest Housing Bubble Risk

A real estate bubble or a housing bubble is a run-up in housing prices fuelled by demand, speculation, and an increase in spending to the point of collapse. It typically starts with an increase in demand in a time of limited supply. Speculators pour money into the market, further driving up demand. At some point, demand stagnates or decreases while supply continues growing, resulting in sharp price drops.

The UBS’ Global Real Estate Bubble Index 2020 showed more than half of 25 major cities analyzed were either at risk of a real estate bubble or overvalued. With a real estate bubble index score of 2.26, Frankfurt ranked as the city with the second-largest risk of the housing bubble globally. Toronto, Hong Kong, Paris, and Amsterdam followed, with 1.96, 1.79, 1.68, and 1.52 index scores, respectively.

In consideration of London, Tokyo, Los Angeles, Sidney, Moscow, New York and Stockholm population are overvalued but not at risk of a bubble.

Statistics show Boston, Singapore, Madrid, Milan, and Dubai have fairly valued housing markets, while the Chicago housing market was the only one undervalued in 2020.

Analyzed by regions, Europe has the most considerable risk of the real estate bubble this year, along with Hong Kong. On the other hand, Toronto is the only major North American city that was at risk of a housing bubble.

House Price to Income Ratio in European Countries Continues Rising

Home values in major markets have been supported throughout the pandemic by government stimulus, low-interest rates, and mortgage bailouts, making recent price gains unsustainable.

With so many housing markets being overvalued or at risk of the real-estate bubble, especially in Europe, the economic uncertainty caused by the coronavirus outbreak only widen the gap between real estate prices and earnings.

The house price to income ratio is a basic affordability measure to see if earnings are keeping up. Lower rates are likely to support home prices since incomes can more easily carry them.

The 2020 OECD Analytical House Price Database showed Luxembourg led the ranking in the second quarter of 2020, with house prices to income indices rising over 138 points. Portugal ranked second with almost 130 points.

Netherlands, Spain, the Czech Republic, and Germany followed with 128.5, 126.6, 122.9, and 121.8 points, respectively. Denmark, Estonia, Finland, and Latvia were on the other side of the list, with less than 100 index points in the second quarter of 2020.

Tags

Metaverse, Data & Web 3.0: Braham Singh, CEO of BDx Data Centers & Author At Dinis Guarda YouTube Podcast

Metaverse, Data & Web 3.0: Braham Singh, CEO of BDx Data Centers & Author At Dinis Guarda YouTube Podcast

Oct 05, 2022
Dinis Guarda Reviews ‘Step Into The Metaverse’ by Mark Rijmenam on BooksABC Series

Dinis Guarda Reviews ‘Step Into The Metaverse’ by Mark Rijmenam on BooksABC Series

Oct 04, 2022
Gaurav Singh, Founder of JPIN – Spiritual Economics And Sustainable Investments

Gaurav Singh, Founder of JPIN – Spiritual Economics And Sustainable Investments

Oct 03, 2022
Metaverse, Green Tech, Cybersecurity… Tech And The Future At The Bloomberg Tech Summit In London

Metaverse, Green Tech, Cybersecurity… Tech And The Future At The Bloomberg Tech Summit In London

Sep 30, 2022
The Future of Metaverse Online Gaming

The Future of Metaverse Online Gaming

Sep 30, 2022
Digital ID, Financial Security, Metaverse – Dinis Guarda Interviews Lars Seier Christensen, Founder of Concordium and Saxo Bank

Digital ID, Financial Security, Metaverse – Dinis Guarda Interviews Lars Seier Christensen, Founder of Concordium and Saxo Bank

Sep 28, 2022
The AARON Retrospective Exhibition: Celebrating Harold Cohen, the Forefather of Computer Art

The AARON Retrospective Exhibition: Celebrating Harold Cohen, the Forefather of Computer Art

Sep 27, 2022
BooksABC, The New Youtube Series By Author And Entrepreneur, founder of citiesabc.com openbusinesscouncil.org Dinis Guarda, Kicks Off With “The Metaverse Handbook” Review

BooksABC, The New Youtube Series By Author And Entrepreneur, founder of citiesabc.com openbusinesscouncil.org Dinis Guarda, Kicks Off With “The Metaverse Handbook” Review

Sep 27, 2022
Shift Towards Circular Economy Driving Digital Transformation in Packaging Sector, Finds GlobalData

Shift Towards Circular Economy Driving Digital Transformation in Packaging Sector, Finds GlobalData

Sep 26, 2022
The ‘Most Hyped’ Upcoming Games, According To Google

The ‘Most Hyped’ Upcoming Games, According To Google

Sep 26, 2022