London house prices have been on a mode of correction from the lofty house prices of years past. According to a new report from UBS, London’s property market has finally cleared out of the bubble risk territory for the very first time in four years. The capital’s real estate is still considered overvalued, and for many out of reach, but the years where the property values soared by 50% are long gone.

Brexit and lack of affordability have driven the low demand from buyers in the housing market for London. As the capital housing demand dropped, areas outside the capital but with commutable distances thrived. According to the UBS report, the house prices of London are close to 10% of the peak seen in 2016.

Other major global cities that the report focused on included Munich, Germany, which was ranked as having the most overvalued housing market. Other cities on the UBS Global Real Estate Bubble Index included:

1. Munich

2. Toronto

3. Hong Kong

4. Amsterdam

5. Frankfurt

6. Vancouver

7. Paris      

8. Zurich

9. London

10. San Francisco

Mark Haefele, chief investment officer at UBS wealth management, remarked, “On a global level, economic uncertainty is outweighing the effect of falling interest rates on urban housing demand. However, in parts of the Eurozone, low rates have still helped to push real estate valuations into bubble risk territory.”

Claudio Saputelli, head of real estate at UBS Global Wealth Management, added, “The worldwide collapse in interest rates will not come to the housing markets’ rescue.

“Mortgage interest rates in many cities aren’t the major challenge for house buyers anymore. Many households simply lack the funds required to meet the banks’ financing criteria, which we believe poses one of the biggest risks to property values in urban centres.”