Saturday, August 19, 2017

Housing Bubbles World-wide

(If formatting here looks weird, try this link: )

Think we got it bad?

UBS report is here:

Interesting report from UBS (Union Bank of Switzerland).  Every year they do a bubble index of housing prices in major cities around the world.  The SF Bay area is moderately "bubbly".  In terms of affordability, many cities are worse, a few are better.

UBS has a bubble index which is a composite of various measures of affordability.  San Francisco is "overvalued" but just shy of a bubble - 7th from the top among major world cities - a little better than Hong Kong but a little worse than Amsterdam.  Click on chart to enlarge

Price-to-Income is probably how most people look at housing prices.  For UBS it is the number of years a skilled worker has to work to afford a 645 sq. ft. (60 sq. meter) condo-apt. near the city center.  By that standard, SF is in much better shape than the majority of world cities due to high wages.  SF is more expensive than Zurich but cheaper than Geneva and Stockholm.  Click on graph to enlarge.

Number of years of work to buy a small condo-apt.

Within North America, San Francisco is high but Vancouver in Canada is worse due largely to foreign investment bidding up housing values.

Europe is mostly worse though a few cities are better.

Asia Pacific (A-PAC) is mixed.  Tokyo is experiencing a boom compared to previous years as people return to central Tokyo.  But if you look further into Japan, you find housing prices falling because the population is falling.  Japan has currently 126 Million people but that is down from 127 Million three years ago.  Japan's population is expected to fall to between 80 M to 50 M by 2110.  (c.f.,

Sydney (in fact all of Australia), like Vancouver, is also experiencing a lot of foreign real estate investment driving up housing prices.  Note the log scale - prices have risen higher than it first appears.

So, it could be worse!