Seoul leads world in home price growth, aided by AI economy: UBS

Seoul recorded the largest real housing price increase over the past year among 23 major cities worldwide, according to a new report by Swiss financial group UBS.

The city also ranked fifth highest on the "bubble index," which measures how far housing prices have diverged from economic fundamentals such as income and rental levels.

In UBS's Global Real Estate Bubble Index 2026, released Tuesday, Seoul posted housing price growth of more than 10 percent over the past year — the highest among all 23 cities surveyed.

UBS attributed the surge to economic growth driven by artificial intelligence.

After Seoul, the cities with the next highest price gains were Lisbon, Madrid, Hong Kong, Tokyo, Zurich, Geneva and Singapore, in that order.

Tokyo recorded a real price increase of 6 percent, a figure UBS said had yet to fully reflect the impact of interest rate hikes.

The average increase across all 23 cities was limited to 0.5 percent. Toronto led the declines, falling roughly 10 percent from a year earlier, while most major cities in Europe and North America — including Vancouver, Sydney, Munich, Frankfurt, Los Angeles, Miami, New York, London and Paris — also posted price drops.

Seoul ranked fifth on the Global Real Estate Bubble Index, with Zurich and Tokyo identified as the cities with the highest bubble risk.

Miami, Dubai, Seoul, Lisbon and Geneva were classified as the next most at-risk markets.

In Asia, Seoul and Hong Kong saw their index scores rise sharply, while Singapore remained stable, reflecting a divergence across the region.

The UBS Global Real Estate Bubble Index measures how far housing prices have deviated from economic fundamentals, including income, rental levels, household debt and residential construction activity.

The cost of homeownership — covering mortgage interest, the opportunity cost of equity, maintenance, taxes and depreciation — exceeded rental costs in most cities. Hong Kong, Vancouver and Los Angeles stood out as cities where ownership costs far outpaced rents, indicating that home prices are expensive relative to rental income in those markets.

Madrid, Seoul, Dubai and Zurich, by contrast, were among the cities where ownership costs fell below rental levels. UBS said this makes buying relatively more attractive than renting and could support housing demand in those markets.

In the near term, UBS projected that persistently rising financing costs would erode housing affordability and act as a brake on further price gains.

"Historically, deteriorating housing affordability and a widening gap between home prices and rents have been leading indicators of housing market corrections and financial crises," UBS said. "Changes in macroeconomic conditions, shifts in investment sentiment, and a sharp increase in housing supply could all trigger a decline in home prices."