GENEVA - Tokyo ranked second worldwide for housing-bubble risk behind the Swiss city of Zurich, with the cost to buy a 60-square-meter apartment near the center of the Japanese capital topping 10 years of income for the average skilled service worker, according to an annual report by UBS.
The latest UBS Global Real Estate Bubble Index, released by the Swiss banking giant in mid-September, rated the cities as the only two at high risk for a substantial housing price correction. Meanwhile, Dubai, Seoul, Geneva and Lisbon were a notch lower in the elevated-risk category along with Miami, which ranked highest last year.
Sydney, Hong Kong and Singapore were the three cities in the Asia-Pacific region assessed to be carrying moderate risk.
UBS said Tokyo's housing demand continues to be supported by stronger household purchasing power, international migration and foreign investors seeking prime apartments. Rising housing costs, however, have pushed residents toward suburban areas and rental properties.
The report noted that housing prices have become disconnected from local incomes in many cities, with home ownership out of reach for many in places like Hong Kong, the least affordable market surveyed.
Following a sharp rebound since mid-2025, driven in part by lower mortgage rates and stronger demand as professionals relocate from mainland China, the price of a 60-sq-meter home in Hong Kong has reached about 15 years of income for the average skilled service worker. The price-to-income ratio exceeded 10 in Tokyo, Seoul, Singapore and elsewhere.
While demand for high-quality condominiums in central Tokyo is likely to remain high, with increasing female labor participation expected to further strengthen household purchasing power, the report warned of signs that the city's current boom may be nearing its limits.
Moreover, any further increases to financing costs would undermine the appeal of home ownership and increase the chances of a correction, it said.
The 12th edition of the index examined residential property markets in 23 major cities worldwide, with Lisbon and Seoul added to the survey this year.
