London, one of the world's major wealth management hubs, moved out of bubble-risk territory for the first time in four years, due in a large part to the long-running Brexit saga, while rival centres Paris and Frankfurt moved into bubble risk terrrain for the first time.

Elsewhere, the study found that the US market was flat for the first time in eight years, and former hotspots Sydney and Vancouver saw a sharp decline. Likely to join them, Hong Kong's white-hot market also fell sharply this year but remains firmly in bubble territory. Meanwhile, Singapore's brief property boom "is over", the report said.

These surveys are a useful barometer of how financial and technology centres perform in more volatile markets, bracing for weaker growth and continued trade disputes, compounded by low interest rates in leading economies.

UBS warned that even though the factors that favour city property investment, such as urbanisation, supply chain constraints, and digital transformation, still hold up, “real price appreciation can no longer be taken for granted".

The Swiss wealth manager looked at residential property prices in 24 major cities around the world and this year found significant market overvaluation in half of the cities it reviewed, suggesting that more centres are hovering in and around bubble status as the mood music turns decidely solemn.

Biggest threat is banking requirements
The study found that the average inflation-adjusted price increases in the cities covered have practically come to a standstill in the last four quarters. It warned that 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 centers." Claudio Saputelli, head of real estate at UBS Global Wealth Management, said.

A look at specifics by region:
Europe
“Index scores have increased in all cities within the eurozone, driven by low interest rates. Paris and Frankfurt are now in bubble risk territory. In Madrid and Milan the housing market is recovering, but still appears to be at an earlier stage of the cycle. In contrast to their eurozone counterparts, London and Stockholm's index scores have declined over the last year. London's housing market has left bubble risk territory as inflation-adjusted prices have been trending downwards since their mid-2016 peak.”
US
“Index scores have not risen in any of the US cities in our study for the first time since 2011. Regulatory changes and affordability issues have caused home prices in New York to lag the countrywide average. Similarly, affordability issues, trade tensions and diminishing foreign demand have capped price growth in San Francisco and Los Angeles for now. Boston is still in fair value territory and benefits from the appeal of the region for businesses and high-income earners. Chicago is undervalued but continues to lag far behind given its increasing fiscal challenges."
APAC
"The momentum in Hong Kong's red-hot property market has stalled. The weaker economic outlook has cooled residential buyer sentiment. However, the market remains firmly in bubble risk territory. By the end of the first quarter of 2019, prices in Sydney were 15 per cent lower than at the peak, and credit growth for housing had reached an all-time low. Singapore's brief housing boom between mid-2017 and mid-2018 is over. Regulatory measures cap price growth expectations and keep the market in fair-valued territory.
Middle East
“Over the last 30 years, Tel Aviv has seen some of highest price growth among the cities we cover in this report. Prices rose nearly constantly between 2003 and 2017. An increase in mortgage rates triggered a correction. Recently, prices have mostly stabilized, but the city is still in overvalued territory. Dubai's house prices are highly volatile. Since the last peak in 2014, prices have fallen by almost 35 per cent and the index value has declined sharply. Prices are expected to find a bottom soon. The market is in fair value territory.”

"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," Mark Haefele, chief investment officer at UBS Global Wealth Management, said.

The report urged investors to remain "cautious when considering housing markets in bubble risk territory." Lead author and head of Swiss real estate investments at UBS, Matthias Holzhey, said: "Regulatory measures to curb further appreciation have already triggered market corrections in some of the most overheated cities." He noted that real prices in all four top-ranking cities in the 2016 edition of the Index have fallen. "On average, they are down by 10 per cent from their respective peaks, and we don't see this trend reversing," he added.