The risk of a housing-market bubble increased in cities across the globe during the pandemic, as prices continued to rise despite warning signals, according to a new report.

Munich, Frankfurt, Toronto and Hong Kong topped the list of cities most vulnerable to a “sharp correction,” according to UBS Group AG’s annual Real Estate Bubble Index released Wednesday.

Government support of personal income and property markets to combat the economic hits from the coronavirus lockdown, along with low interest rates and suspended foreclosures, pushed values higher in many cities, according to the report, which analyzed prices in the second quarter of 2020.

“It’s clear that the current acceleration is not sustainable,” the report said. “Rents have been falling already in most cities, indicating that a correction phase will likely emerge when subsidies fade out and pressure on household incomes increases.”

The cities most at risk of a bubble this year are:

  • Munich
  • Frankfurt
  • Toronto
  • Hong Kong
  • Paris
  • Amsterdam
  • Zurich

In some cities, especially those with strong laws favoring tenants, it would take more than 35 years worth of rental income for an apartment to pay for itself, the report said.

The report says investors should consider selling properties and look for places to put their money that will bring higher returns.

“Though real estate is often regarded as a legacy investment, now is certainly not the worst time for owners of multiple properties to consider profit taking,” said Claudio Saputelli, head of Swiss real estate investments at UBS Global Wealth Management.

Prices are falling in four cities: Madrid, San Francisco, Dubai and Hong Kong.  

Out of 25 cities analyzed, Chicago was the only location where the real-estate market was deemed undervalued. New York ranked as slightly overvalued, while Singapore, Milan and Dubai were seen as being fairly valued.

The most unaffordable cities — where people need to work 10 years or more to buy a 650-square-foot apartment — are Paris, London, Singapore, Tokyo, Tel Aviv and New York.