THE only real surprise is the word ‘second’. A ‘bubble index’ designed by banking leviathan UBS suggests London has the second most over-valued property market in the world. Only Vancouver is worse according to the Swiss bank, which notes an invasion of Chinese buyers has pushed the Canadian to the brink.
Hong Kong, Munich, Stockholm and Sydney have also been declared at serious risk of a property bubble burst by UBS economists who point to price hikes in excess of 50 per cent in just five years as symptomatic of the problem.
In fact the report finds all the European cities analysed are vastly over-valued, with prices bearing little correlation to local economic conditions and inflation rates.
USB admit property bubbles can’t be proven until they burst but are adamant the situation is fragile for particularly overvalued markets. All it would take to tip a city over the edge would be a slight change in interest rates or international capital flow, which could happen any time in an increasingly volatile financial system.