UBS has released a new report examining the global property market, which finds that European cities are most at risk of a property market bubble while Sydney prices are still overvalued but less risky. UBS also warns of price corrections once stimulus measures end:
Despite the sharpest global economic downturn in more than 60 years, house prices have actually accelerated in the last four quarters.
Several puzzle pieces had to fall into place for house prices to avoid plummeting in such an environment. Governments have compensated many potential home buyers for their income losses. Financing conditions have been relaxed, and taxes and foreclosures suspended in many countries. And low interest rates that seem set in stone for years to come have kept investment demand high.
