Contrary to what many people think and believe, a new report says New York real estate is far from entering a bubble.
All signs for the real estate markets of London and Hong Kong point to an impending bubble that could burst anytime. But according to a report in Quartz, the situation in New York could not be any better as properties there are evenly priced.
Economic experts from UBS made calculations based on the numbers provided by major finance institutions to create an index for real estate bubble on a global scale. They used several indicators such as the fluctuations of home prices over certain periods, rate of rent in an area, and how much people earn. In addition, the index is also based on construction growth and how much people are borrowing from financial institutions.
According to the same post, in the rankings made based on the index for real estate bubble, London and Hong Kong are two major cities that have the highest risk of entering a dangerous bubble phase. As an example, a 60-square-meter apartment property in Hong Kong will cost an amount that is equivalent to at least two decades' worth of wages for an ordinary worker. In London, the influx of foreign investors has raised the prices of properties far beyond the usual rates that locals can afford to pay for. Meanwhile, other cities included in the list are Sydney, Vancouver, San Francisco and Amsterdam.
New York, surprisingly, is not among the top candidates for a bubble. The report said that while prices of property in the Big Apple are sky high, there is a big difference from entering into the bubble zone. According to Luxury Daily, real estate in the Manhattan area has grown by 9.5 percent in the third quarter compared to 2014. It is the fastest growth rate the area has experienced in seven years.
