ZURICH • Hong Kong is the city at most risk of a property bubble, followed closely by Munich, Toronto and Vancouver, said a study published by Swiss bank UBS.

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, said the study of 20 top cities worldwide.

In Hong Kong, it now takes 22 years of labour for the median-salaried skilled service sector worker to buy a 60 sq m 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," Mr Mark Haefele, chief investment officer at UBS Global Wealth Management, was quoted as saying in the report released on Thursday.

In contrast to the boom of the mid-2000s, the bank did not 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 home prices falling in London, Stockholm and Sydney by over 5 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 that 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.

AGENCE FRANCE-PRESSE