Price bubbles often happen in property markets. A "bubble" means the price of a property is much higher than its real value, but you can only be sure it was overpriced once the bubble bursts.
According to the latest UBS Global Real Estate Bubble Index 2025, several international cities are showing signs of housing bubbles, where property prices are rising much faster than local incomes and rents.
For property buyers and investors, these global signals are important to understand.
But how do they connect to opportunities in emerging destinations like Bali? Here’s what you should pay attention to.
Key Takeaways
- UBS Bubble Index 2025 shows many global cities face overheating, with prices rising much faster than incomes and rents.
- Miami, Tokyo, and Zurich are highest risk; Dubai and Madrid risks are rising; London, Paris, and São Paulo remain low risk.
- Global trends: Housing markets are cooling, but affordability issues persist due to high mortgage costs and slowing construction.
- Unlike overheated global markets, Bali offers affordability, strong rental yields, and lifestyle appeal—making it an attractive, stable investment destination.
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Global Real Estate Bubble Index
The UBS Global Real Estate Bubble Index 2025 highlights several key findings.
First, the report warns that housing prices in some global cities are rising much faster than rents and incomes—a classic sign of overheating and potential bubbles.
There are also shifts in risk levels. Bubble risks have eased in Miami, Tokyo, Toronto, and Hong Kong, but increased sharply in Dubai and Madrid.
Here’s how the cities are grouped by risk level:
| Risk Level | Cities |
|---|---|
| Highest Risk | Miami (top of the list), Tokyo, Zurich, Los Angeles, Dubai, Amsterdam, Geneva |
| Moderate Risk | Singapore, Sydney, Vancouver, Toronto, Madrid, Frankfurt, Munich |
| Low Risk | London, Paris, Milan, Hong Kong, San Francisco, New York, São Paulo (lowest risk overall) |
In terms of market trends, the report notes that:
- Global housing markets have cooled for the third year in a row.
- Mortgage costs remain high.
- New construction is slowing.
- Affordability continues to be a major challenge.
Property Valuation
Price-to-income
In most big cities, a 60 m² (650 ft²) apartment is far too expensive for the average worker.
- Hong Kong is the least affordable—it takes about 14 years of income to buy one.
- Paris, London, and Tokyo are also very costly, with prices more than 10 times local incomes.
- Other pricey cities include Zurich, Sydney, Geneva, Munich, and São Paulo.
Since interest rates rose after 2021, the average worker can now afford about 30% less space. Current prices look especially hard to sustain in New York, Sydney, and London.
Even if buyers qualify for loans, high mortgage rates make monthly payments heavy, even in U.S. cities with lower price-to-income ratios.
Price-to-rent
Price-to-rent multiples show how many years of rent it takes to buy an apartment.
Over the past 3 years, these multiples dropped in most European and Asia-Pacific cities (except Tokyo) because rents rose faster than home prices.
Zurich, Munich, Geneva, Frankfurt, Tokyo, and Hong Kong are the most expensive, with ratios near or above 30. This shows people expect big future price gains, even if rental income is low. If expectations fall, these markets could face sharp losses.
Dubai, São Paulo, and U.S. cities have lower multiples. This is due to freer rental markets, higher interest rates, and added risk in places like Dubai and São Paulo.
Read More: Invest in Ubud: Best Locations for Profitable Property Investment
Why Bubble Risks Matter for Investors?
A housing bubble means that property prices are unsustainably high. When this happens, affordability becomes a major issue, and sooner or later, markets often experience a correction.
For international investors, this can mean sudden losses or slower returns.
By contrast, affordable and balanced markets where property prices align with rental demand and local purchasing power tend to provide more stable growth. This is where Bali stands out.
Bali’s Property Market in the Global Context
Unlike global hotspots with overheated prices, Bali continues to offer attractive value for investors:
- Affordability: Compared to cities like Hong Kong or London, where it can take over a decade of income to buy a small apartment, Bali real estate remains far more accessible. Villas and luxury properties here are priced competitively while still offering strong rental yields.
- High Rental Demand: Tourism and long-term stays drive strong occupancy rates for villas. With Bali’s popularity as a lifestyle and remote-work destination, well-located properties can deliver consistent rental returns.
- Lifestyle Appeal: Beyond the numbers, Bali’s unique mix of culture, nature, and hospitality continues to attract international residents and investors alike, creating lasting demand for real estate.
Read More: Bali vs. Thailand: Which Offers the Best Property Investment?
Key Considerations for Bali Investors
If you’re exploring opportunities to invest in Bali, here are a few things to keep in mind:
1. Focus on Location
Areas like Canggu, Seminyak, and Ubud remain in high demand, while emerging spots near Sanur and north Bali present fresh opportunities at lower entry points.
2. Look at Rental Yields
Global cities with bubble risks often have very low rental returns. In Bali, yields remain comparatively high, especially for well-managed villas in tourist hotspots.
3. Diversify for Safety
The UBS report highlights the importance of avoiding overheated markets. Diversifying into Bali real estate can balance a portfolio that includes properties in more volatile global cities.
Conclusion: Invest Smarter, Gain More
The UBS Global Real Estate Bubble Index 2025 shows that many established global markets are facing affordability crises and bubble risks. For property investors, this is a reminder to look for markets where prices, incomes, and rental demand remain in balance.
If you’re looking for stable property investment, Bali is a strong choice. With its mix of affordability, lifestyle appeal, and rental potential, Bali remains a resilient and attractive market for investors.
With the guidance of experts at Bali Villa Realty, investors like you can tap into these opportunities with confidence!
If you have any questions or want to learn more about Bali’s market opportunities, book a free, no-obligation consultation with us—anytime at your convenience.
FAQ
1. What are the long-term effects of a bubble?
A bubble collapse can hurt both borrower and lender confidence for years. It often exposes gaps in financial regulation and risk management, leading to strong pressure for reforms.
2. How risky is investing during a bubble?
Investing in a bubble is highly risky. Prices may rise quickly, but so does the chance of a sharp crash. Valuations get inflated, market signals become unreliable, and speculation dominates.
3. How to avoid asset bubbles?
Avoid bubbles by staying skeptical of hype, focusing on fundamentals, diversifying your portfolio, and working with a trusted financial advisor.
