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The UBS Global Real Estate Bubble Index 2026 analyzes trends in 23 major global residential markets. Over the past year, real home prices, rents, and incomes have remained stable overall, but with significant differences among cities: Seoul, Lisbon, Madrid, and Hong Kong recorded real price increases of close to 10%, while Vancouver and Toronto, at the opposite end of the spectrum, saw declines of about 10%. Overall, in more than half of the markets examined, residential real estate has failed to hedge against inflation over the past five years: cities that presented a high “bubble risk” in 2021 subsequently saw an average price decline of about 15%. Among the factors driving these trends over the past five years, UBS highlights persistently high financing costs, supply constraints, and the growing influence of financial wealth on demand, which widens the gap between high-end neighborhoods and the rest of the urban market. In 2026, Zurich and Tokyo will face the highest bubble risk, with scores of 1.69 and 1.54, respectively, while Miami has fallen into the “high risk” category, partly due to slowing demand and reduced affordability.

In Europe, the picture is mixed: Zurich and Geneva remain among the markets most exposed to imbalances, supported by still-low financing costs and limited supply. The case of Lisbon—included in the survey for the first time—is particularly significant: real prices there have risen by an average of nearly 7% annually over the past decade, with a further 10% increase since mid-2025; Madrid, too, has seen annual price growth of 9%, outpacing the growth in incomes and rents. In both cities, pressures on affordability are therefore intensifying, although in Lisbon some of the factors that had fueled the real estate boom are losing steam. In contrast, Frankfurt and Munich continue to be affected by the weakness of the owner-occupied housing market, which is held back by high construction and financing costs: in Frankfurt, real prices are now nearly 25% below their 2021 peak. Paris is also experiencing a significant decline, with real prices down 25% from 2021, and, along with London, falls into the category of low “bubble risk”; in the British capital, real prices have fallen by more than 15% compared to 2021, while rents remain near historic highs due to the persistent housing shortage.

Milan falls into the moderate-risk category, with an index of 0.50—up from 0.01 in 2025—signaling a worsening of imbalances. In recent years, price growth has been driven by demand from foreign investors and the formation of new households, which has not been offset by a sufficient increase in supply. Prices have risen by 9% year-over-year, outpacing increases in rents and incomes and worsening affordability. The market shows a growing polarization between high-end central neighborhoods, driven by international demand, and the rest of the city, where household purchasing power is the main constraint. According to UBS, domestic incomes alone are insufficient to support home purchases in the segments under consideration, while the financial viability of the investment depends increasingly on expectations of future capital gains. Price growth, however, slowed in the spring of 2026, partly due to higher financing costs and more restrictive regulations on short-term rentals. Limited supply continues to support property values, but expansion into outlying areas and neighboring municipalities is helping to shift part of the demand toward more affordable options.