Living in the Netherlands, it is quite obvious how expensive it is to live in Amsterdam. The demand for housing grossly outweighs the supply, which continues to drive up prices. Indeed, housing in Amsterdam is so expensive that it has been awarded sixth place in the Global Real Estate Bubble Index 2020, beating the likes of London, New York and Singapore.

Global Real Estate Bubble Index 2020

Swiss bank UBS has conducted its yearly study into house prices in 25 cities across the world, comparing this year’s results to the results from 2019 and 2018. The index identifies the risk of property price bubbles in these cities, which are given an index score that places them in one of four categories: 

• Undervalued (score between -1,5 to -0,5)
• Fair-valued (-0,5 to 0,5)
• Overvalued (0,5 to 1,5)
• Bubble risk (above 1,5)

A number of cities on the list saw their scores drop this year, including London (1,26), San Francisco (0,99), Sydney (0,75) and Madrid (0,43). However, UBS states that, in spite of the global recession, inflation-adjusted house price growth in all 25 cities accelerated in the last 12 months. Furthermore, the coronavirus pandemic has lead to growing uncertainty in the future of urban housing.

Amsterdam’s real estate market in 2020

For the third year in a row, Amsterdam has scored above 1,5, placing it in the bubble risk category. This means the city is at risk of a real estate bubble, which occurs when housing is substantially mispriced for an extended period of time.

However, this year Amsterdam’s score dropped from 1,84 to 1,50. In 2019, the Dutch capital ranked joint-third with Hong Kong. Now, it ranks sixth out of the eight bubble risk cities.

While the city’s ranking and score may have dropped, UBS says Amsterdam's housing market is not far behind the most overpriced European cities, and that it treads on bubble risk territory along with Paris, Munich, and Frankfurt.

The most overpriced housing markets

The cities with the most overpriced housing markets, and consequently the cities most at risk of a housing bubble, are: 

1. Munich - 2,35
2. Frankfurt - 2,26
3. Toronto - 1,96
4. Hong Kong - 1,79 
5. Paris - 1,68 
6. Amsterdam - 1,52
7. Zurich - 1,51

For a full breakdown of the rankings, visit the UBS website.