Another warning has been sounded about the state of Canada’s hottest housing markets.

Toronto and Vancouver are among just 6 of the major global financial centres to be flagged as at risk of a housing bubble by wealth manager UBS.

The bubble risk in the two Canadian cities are considered the riskiest in North America and rank third and fourth below Hong Kong and Munich, beating Amsterdam and London.

Values in Toronto went down slightly in the UBS Global Real Estate Bubble Index 2018 while those in Vancouver increased.

UBS Global Wealth Management’s chief investment officer Mark Haefele says that conditions are different from before the last financial crisis as there is no global evidence of simultaneous excesses in lending and construction.

Outstanding mortgage volumes are growing half as fast as in the run-up to the financial crisis, limiting economic damage from any price correction.

"Nevertheless, investors should remain selective within housing markets in bubble risk territory such as Hong Kong, Toronto, and London," he warns.

US financial centres overvalued but no bubble risk
Three cities south of the border – San Francisco, Los Angeles, and New York - are considered overvalued but not at risk of a housing bubble.

Boston is considered fairly valued while Chicago is deemed to be undervalued.

 

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