ZURICH (AFP) - Hong Kong is the city at most risk of a property bubble, followed closely by Munich, Toronto and Vancouver, according to a study published by the Swiss bank UBS on Thursday (Sept 27).

Chicago is the only undervalued housing market in the 20-city index, while Singapore, Milan and Boston are deemed fairly valued.

Amsterdam and London were also in bubble territory, while Stockholm, Paris, San Francisco and Frankfurt were close, according to the study of 20 top cities across the globe.

In Hong Kong, it now takes 22 years of labour for the median-salaried skilled service sector worker to purchase a 60 square metre apartment. A decade ago it took only 12 years.

"Although many financial centres remain at risk of a housing bubble, we should not compare today's situation with pre-crisis conditions," Mark Haefele, chief investment officer at UBS Global Wealth Management, was quoted as saying in the report.

In contrast to the boom of the mid-2000s, the bank didn't find evidence of simultaneous excesses in lending and construction, with outstanding mortgage volumes growing at half the rate of the lead up to the financial crisis.

It even noted the first cracks in the boom, with housing prices declining in London, Stockholm and Sydney by more than five per cent in real terms.

UBS also spoke of an affordability crisis, noting that "most households can no longer afford to buy property in the top financial centres without a substantial inheritance".

It warned this situation "jeopardises cities' long-term growth potential".

The report was released on the same day as three of Hong Kong's biggest banks raised their lending rates for the first time in 12 years, ending an age of cheap cash that could hit the city's famously red-hot property market.