Toronto and Vancouver housing bubble risk eases, UBS index finds
“Higher-for-longer financing costs are likely to cap house-price gains in the near term,” said Matthias Holzhey, lead author of the study and economist at UBS Global Wealth Management’s Chief Investment Office.
From bubble to correction: what happened to Canadian cities
Toronto and Vancouver were among the markets most prominently flagged for elevated bubble risk in 2021.
Cities flagged with high bubble risk in 2021, like Frankfurt, Paris, Toronto, Hong Kong, and Vancouver, saw average real price drawdowns of nearly 20 per cent from their peaks as interest rates rose in subsequent years, compared with inflation-adjusted declines of about five per cent on average in cities with lower initial imbalances.
That correction has been significant in the Canadian context. Royal LePage projected in its 2026 Market Survey Forecast that aggregate home prices in the Greater Toronto Area would fall 4.5 per cent year over year to $1,054,129, while Greater Vancouver prices are expected to decline 3.5 per cent to $1,147,868 in the fourth quarter of 2026. Those projections align closely with the trajectory the UBS index is tracking.
The shift reflects a confluence of policy interventions and macroeconomic conditions. Tougher rules from new taxes to outright purchase bans to rent control measures have dimmed the appeal of once sought-after markets such as Vancouver and Toronto, according to Maciej Skoczek, author of the study and economist at UBS Global Wealth Management’s Chief Investment Office.
