Tokyo ranks 2nd globally for housing-bubble risk

Tokyo secured the second spot globally for housing-bubble risk, trailing only Zurich, according to UBS's annual report. The expense of purchasing a 60-square-meter apartment close to the city center surpassed ten years' worth of income for the average skilled service worker. UBS's Global Real Estate Bubble Index, unveiled in mid-September, designated Tokyo as one of the two cities with the highest risk of a significant housing price correction.

Other cities in the high-risk category included Dubai, Seoul, Geneva, Lisbon, Miami, followed by Miami ranking highest last year. Sydney, Hong Kong, and Singapore were deemed to be in the moderate-risk category among Asian-Pacific cities. UBS attributed Tokyo's ongoing housing demand to increased household purchasing power, international migration, and foreign investors seeking prime apartments.

However, the escalating housing costs have driven residents towards suburban areas and rental properties. The report highlighted that housing prices have become decoupled from local incomes in various cities, making homeownership unattainable for many, particularly in Hong Kong, which was identified as the least affordable market surveyed.

Following a robust rebound since mid-2025, fueled by lower mortgage rates and heightened demand as professionals shifted from mainland China, the price of a 60-sq-meter home in Hong Kong equaled approximately 15 years of income for an average skilled service worker. The price-to-income ratio surpassed ten in Tokyo, Seoul, Singapore, and other locations.

Despite the persisting high demand for premium condominiums in central Tokyo, where expanding female labor participation is anticipated to further enhance household purchasing power, the report cautioned about the possibility of the city's current boom nearing its end. Additionally, any further hikes in financing costs would weaken the desirability of homeownership and heighten the likelihood of a correction, the report cautioned.

The 12th edition of the index scrutinized residential property markets in 23 major cities globally, with Lisbon and Seoul incorporated into the survey this year.