Real estate bubble: Toronto, the riskiest city in the world, according to UBS

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Real estate bubble: Toronto, the most at-risk city in the world, according to UBS

A real estate bubble could burst in Toronto, warns the firm UBS.

Toronto ranks at the top of the world rankings 2022 from the firm UBS of cities facing the bursting of a real estate bubble. Vancouver ranks sixth.

The Canadian metropolis is ahead of Frankfurt, Zurich, Munich and Hong Kong in the ranking of the cities most at risk.

UBS notes in its report that real estate prices have more than tripled in Toronto and Vancouver over the past 25 years.

This price increase experienced its strongest growth in 5 years in 2021-2022, when the average price of& #x27;a property increased by 17% and 14% respectively in the two Canadian cities.

A housing shortage coupled with strong population growth, strong investor demand and low mortgage rates have contributed to this real estate frenzy, adds the financial consulting firm.

“Recent Bank of Canada rate hikes could be the straw that broke the camel's back. »

— UBS (report)

The Bank of Canada raised its key rate to 3.25% in September to counter inflation and recently reported that further increases were to be expected.

UBS points out that a “correction” in house prices is already underway in some parts of the country.

The firm establishes its annual ranking based on factors such as the price of real estate compared to the average income of the population and the evolution of mortgage rates and housing starts to GDP.

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