UBS: Tel Aviv housing market overvalued

Tel Aviv coastline Photo: Shutterstock

UBS says that the market had entered bubble-risk territory by 2017 but valuations have normalized somewhat after falling by more than 10%.

The UBS Global Real Estate Bubble Index 2019 has included the Tel Aviv housing market for the first time. The UBS Global Real Estate Bubble Index, which is a yearly study by UBS Global Wealth Management's Chief Investment Office, and indicates bubble risk or a significant overvaluation of housing markets, has found that Tel Aviv's housing market is overvalued despite recent double-digit falls.

While Tel Aviv did not appear alongside cities like Munich, Toronto, Hong Kong and Amsterdam where the bubble risk is the greatest, or even Frankfurt, Vancouver and Paris, which are in bubble risk territory as well, UBS said that Tel Aviv's housing market is "in overvalued territory." UBS added that, "major imbalances characterize Zurich, London, San Francisco, Tokyo and Stockholm. Valuations are stretched in Los Angeles, Sydney, Geneva and New York. By contrast, property markets in Singapore, Boston and Milan seem fairly valued while Chicago remains undervalued."

UBS said, "Tel Aviv has seen some of highest price growth among the cities covered in this report over the last 30 years. Prices rose nearly constantly between 2003 and 2017. Consequently, the market entered bubble-risk territory. Stretched affordability and rising mortgage rates have now ended the party. Valua¬tions have thus normalized somewhat as real prices have de¬clined by a double-digit percentage."

Published by Globes, Israel business news - en.globes.co.il - on October 2, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Tel Aviv coastline Photo: Shutterstock
Tel Aviv coastline Photo: Shutterstock
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