The Swiss bank UBS warns that housing prices in Madrid are overvalued


The Swiss bank UBS believes that housing prices in Madrid have begun to be inflated in 2019. In its "Global real estate bubble risk index 2019", the entity affirms that real estate assets in the Spanish capital were" well valued "in 2017 and 2018, but now they fall into the category of" overvalued. "The next step, in which there are towns such as Amsterdam and Paris, is the of the cities “with bubble risk.” The Spanish capital is ranked 17th among the 24 cities analyzed, a list that leads by its highest bubble risk Munich and closes Chicago, where assets are considered to be undervalued.

List of cities analyzed by UBS

List of cities analyzed by UBS

The bank's analysis includes twenty-four cities worldwide, and this year for the first time it adds Madrid, along with Moscow, Dubai and Tel Aviv to the national team. "These cities have aroused the interest of investors in recent years," they explain.

According to the low interest rates, they have encouraged "the bubble in the Eurozone", taking four European cities (Paris, Frankfurt, Munich and Amsterdam) to risky territory. The other cities in this danger group for UBS are Toronto, Hong Kong Vancouver.

However, other cities have left the bubble danger zone due to price devaluation, as is the case in London. There have been "sharp" corrections in the valuation of homes in Vancouver, San Francisco, Stockholm and Sydney. There have also been price declines in New York and Los Angeles, and in Singapore there has been hardly any variation, they say.

UBS believes that there will be an "end of the price boom", in view of the "trend of price slowdown" in most cities. The average value, they explain, has been frozen for the first time since 2012 in the analyzed territories.

"Despite the global collapse of interest rates, the negative trend in housing prices will probably continue," UBS predicts. As reasons he cites that households may lack the necessary funds to buy a house or meet the financing criteria of the banks, which joins the "uncertainty of a recession."

In the case of Madrid, they emphasize that construction activity has accelerated and that prices have increased 30% since 2012, but they are still 25% below the 2007 peak. They affirm that price growth can continue, although they warn that it will be limited by moderation in income. They also remember that the salary years that a qualified employee should dedicate to acquire an apartment of about sixty square meters near the city center has already increased to six years.

. (tagsToTranslate) UBS (t) considers (t) housing (t) Madrid (t) overvalued



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