A report from the Swiss bank UBS suggests that, when it comes to overpriced real estate, Vancouver's "bubble risk" is unmatched on the planet
The UBS Global Real Estate Bubble Index, released this week, reports the rise in Vancouver's average housing prices compared with the growth in average wages, rents and other economic factors make it the most likely to experience a sudden downward correction compared with 17 other large cities around the globe
The report also warned that investors are less likely to see growth in property value in high "bubble risk" cities.
One expert at UBS said the report doesn't mean Vancouver is likely to experience a home price correction like the U.S. housing crisis that contributed to the 2008-09 recession. Rather, it's meant as a cautionary signal for potential real estate investors.
He added that the province's move to control the city's overheated housing market by imposing a 15% tax on foreign buyers of homes in Metro Vancouver as of Aug. 2 could reduce its bubble risk rating.
The UBS report was based on Vancouver data up to last spring, before the foreign buyers' tax was implemented.
Last week, the Clark government in B.C. credited its new tax in reporting that housing deals in Vancouver involving foreign buyers dropped to 60 between Aug. 2 and Aug. 31 after hitting 1,974 between June 10 and Aug. 1.
In early September, the Real Estate Board of Greater Vancouver said home sales fell 26% in August compared with the same month last year. It reported that the composite benchmark price for all residential properties jumped 31% to $933,100.
