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Toronto's real estate market has been ranked as the fifth riskiest bubble globally by UBS in its 2024 Global Bubble Index. Although Toronto has improved its risk score by showing advancements in three out of five subindexes, it remains in a precarious position due to a significant disconnect between home prices and local income levels. The report highlights that the city's rising ranking is more a reflection of other cities de-risking faster rather than an actual reduction in Toronto's bubble risk.

The assessment reveals that Toronto's home prices are still highly inflated when compared to income and rent levels, indicating a persistent bubble risk. Despite some adjustments in the market, home prices remain out of reach for many residents. Additionally, while national home prices have surged, it suggests that the overall Canadian market is becoming increasingly frothy, rather than indicating that Toronto's housing situation is normalizing.

Toronto also scores low in mortgage risk, attributed to Canada's unique credit reporting system, which excludes high-interest private mortgages from national data. However, this creates a misleading picture of stability, as mortgage delinquencies in Toronto are rising sharply, especially among overleveraged investors. Overall, despite the favorable subindex scores, the data fail to capture the significant stressors facing Toronto’s housing market, highlighting the need for regulators to address the growing risks effectively.

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