Properties in London are overvalued, but despite growth in sales and prices across some parts of the capital in recent months the market is not in bubble territory, according to UBS.

The bank reports that home values in leading global markets continue to grow, despite the economic downturn caused by the coronavirus pandemic, with prices in some major cities overheating, which increases the risk of a real estate bubble.

According to data provided by UBS, Munich represents the city with the highest housing bubble risk worldwide at the moment.

Frankfurt is ranked as the city with the second-largest risk of the housing bubble globally, followed by Toronto, Hong Kong, Paris, and Amsterdam.

London, along with Tokyo, Los Angeles, Stockholm, Sidney, Moscow, and New York, is considered overvalued, but not at risk of a bubble.

The UBS’ Global Real Estate Bubble Index 2020 showed more than half of 25 major cities analysed were either at risk of a real estate bubble or overvalued.

The bank said: “Home values in major markets have been supported throughout the pandemic by government stimulus, low-interest rates, and mortgage bailouts, making recent price gains unsustainable.”

The study, which analysed property prices and earnings, found that Boston, Singapore, Madrid, Milan, and Dubai have fairly valued housing markets, while the Chicago housing market was the only one undervalued in 2020.