Toronto and Vancouver drop to weakest housing markets in UBS global ranking

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Photo by R.J. Johnston Toronto Star/Toronto Star via Getty ImagesToronto and Vancouver were named the two weakest housing markets internationally in 2026, in Swiss bank UBS Group AG’s global real estate bubble index, released on Tuesday. However, UBS also rated the two Canadian cities as being at “moderate” risk of a bubble in the sector.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountInflation-adjusted home prices in both cities’ markets plunged by about 10 per cent year over year, compared with the rest of the global urban centres analyzed, which ticked up by just about 0.5 per cent on average. Seoul, South Korea, was at the top of the index, with the strongest annual increase in home price growth at 11 per cent, followed by Lisbon, Portugal (up 10 per cent) and Madrid (up eight per cent).The UBS report selected cities that reflected their housing markets’ importance to global financial markets and residential real estate investment. SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againThis is a major reversal for the two Canadian cities from their peak years. Between 2014 and 2022, Toronto had been the strongest market among the cities analyzed by UBS before dropping to the bottom of the pack in 2026, as prices sank by 30 per cent. Vancouver home prices also fell 20 per cent since hitting their peak in 2022.Even though home prices in these cities have dropped quickly in recent years, they remain expensive by international standards, said Aled ab Iorwerth, deputy chief economist at the Canada Mortgage and Housing Corporation (CMHC). The benchmark home price in the Greater Toronto Area has hovered around the $930,000-mark since March of this year, according to the latest data from the Toronto Regional Real Estate Board. In Metro Vancouver, the benchmark home price was about $1.08 million in August, according to Greater Vancouver Realtors.The UBS report’s global price-to-income index, which looks at the number of years of average income it takes to purchase a 650-square-foot apartment, placed Toronto at the bottom and Vancouver on the lower end (roughly around five years). This would still make these Canadian cities more affordable compared with other urban centres, such as Paris, which requires an average of more than a decade’s income, for example, ab Iorwerth said.“From 2006 onwards, home prices in Toronto and Vancouver were really growing,” he said, adding that economic and population growth, coupled with these cities attracting high-tech industries, led these urban centres to outpace others in terms of home price growth. “They became very unaffordable.”This was a trend seen in other major cities, such as Sydney, Australia, San Francisco and Boston in the U.S., which experienced tremendous price growth over the past decade-and-a-half as well, he added.But after the homebuying surge seen during the COVID-19 pandemic, Toronto and Vancouver prices began to flatline. As well, as these cities became more expensive, people started to move to other cities instead, leading to price growth in other metros, such as Ottawa and Montreal, ab Iorwerth said.In the past year, general economic uncertainty has meant that people have been more reluctant to make large capital investments, such as purchasing a home. “The other impact, and maybe this is exaggerated in Toronto, is the fall … in the condo sector,” ab Iorwerth said.According to a May report from Toronto-Dominion Economics, GTA resale benchmark condo prices fell 10 per cent year over year in the first quarter of 2026, and the bank expects prices won’t trend higher until 2028. By that time, it projects prices will have plummeted 25 to 30 per cent from their early 2022 peak.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.The UBS bubble risk report also looked at the likelihood of a substantial price correction. The report placed Toronto and Vancouver at moderate risk levels, dropping from elevated risk status in 2024. Globally, Zurich and Tokyo were the only cities facing high housing bubble risk levels, although Jonathan Woloshin, U.S. real estate strategist at UBS, added this does not necessarily mean they face an “impending crash” such as what was seen in the U.S. in 2008.“Vancouver and Toronto had been overheated, especially relative to other markets, (and) things have pulled back,” Woloshin said.Increased construction in Toronto also helped shed some of that “speculative froth,” he added. “That’s why I think you’re seeing a lot of the prices come down on an inflation-adjusted basis.”Looking forward, ab Iorweth said he does not anticipate any drastic home price declines in Toronto and Vancouver, though this depends on the international backdrop of any potential trade or energy shocks in the future.He also said he doesn’t expect elevated risk of a housing bubble in the short term but added the drop in supply in Toronto poses a challenge. CMHC’s fall housing supply report said Toronto needs to boost its annual housing starts by at least 50 per cent over the next decade to restore affordability to pre-pandemic levels. In the first half of 2026, population-adjusted housing starts were at their lowest since 1996 (excluding 2025).“If the economy were to recover strongly in (the next) three years, I’m a bit concerned that the housing supply will not be there,” ab Iorweth said. “And so, we could go into a bubble condition in a few years if we don’t carry on building housing.”We apologize, but this video has failed to load.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.