Posthaste: Toronto Ranks Fifth in the World for Risks of Real Estate Bubble
Of 16 cities worldwide considered at high or elevated risk last year on the USB Global Real Estate Bubble Index, only six remain this year — and Toronto ranks fifth on the list.
The index defines a bubble as substantial and sustained mispricing of an asset. Typical signs of this imbalance are a decoupling of prices from local incomes and rents and imbalances in the real economy, such as excessive lending and construction activity, as stated by UBS.
Cities with scores above 1.0 are considered an elevated risk, while scores above 1.5 are high risk. Toronto’s score fell from 1.21 in 2023 to 1.03 in 2024, but slower growth in incomes and rents kept it at elevated risk.
In Vancouver, on the other hand, Canada’s most expensive housing market, home prices compared to income growth have not increased as much, while rents have risen sharply, says UBS. It is now considered at moderate risk of a real estate bubble.
Globally, the cities at greatest risk of real estate bubbles in 2022 before interest rates began to climb saw the biggest corrections in prices, said the report. “Vancouver, Toronto and Amsterdam recorded significant prices declines of around 10 percent in real terms,” it added.
