If you follow Canadian real estate news closely, you can be forgiven for being a little confused about the state of the housing market.
Depending on whom you ask, Canadian markets — particularly Toronto and Vancouver — are either on the cusp of a major correction, or have achieved the hoped-for "soft landing" and will be back to rapid price growth soon enough.
Count Swiss bank UBS as among the pessimists. The bank's annual Global Housing Bubble Index has ranked Toronto and Vancouver third and fourth, respectively, in a survey of housing bubble indicators. Only Hong Kong and Munich are ranked as having bigger housing bubble risks.
"Price bubbles are a regularly recurring phenomenon in property markets," the UBS report stated. "The term 'bubble' refers to a substantial and sustained mispricing of an asset, the existence of which cannot be proved unless it bursts."
For Toronto, the third-place finish is actually an improvement from last year's first-place ranking.The slowdown in price growth over the past year and a half has reduced the city's bubble risk, slightly. Vancouver's ranking has stayed steady.
UBS noted that price growth among the major cities surveyed has slowed in the past year.
"The first cracks in the boom's foundation have begun appearing: house prices declined in half of last year's bubble risk cities," the report stated.
Watch: The extreme measures some people take to buy a home (story continues below)
In Toronto, house prices are still 50 per cent higher than they were five years ago, UBS noted, but last year's provincial Fair Housing Plan, which introduced a foreign buyers' tax and stricter rent controls, "probably contributed to the cooling" seen since the spring of 2017.
In Vancouver, inflation-adjusted house prices have doubled in 12 years, and "already strained affordability will become an acute issue if mortgage rates rise further, one that may halt the local market boom," the report stated.
The report offers up an explanation for the housing boom seen in many major cities around the world in recent years, one that might sound familiar to Canadians:
Easy financing conditions boosted demand almost everywhere. Major cities profited from the growing importance of the digital economy and the wider trend toward urbanization. Finally, the number of wealthy households searching for safe assets in the most attractive residential areas surged.
And it offers a warning: The biggest killer of housing bubbles is now on the prowl.
"Historically, investors have had to be alert to rising interest rates, which have served as the main trigger of corrections. Most such downdrafts in the past 40 years have been preceded by an increase in rates," UBS noted.
That's a far cry from the recently optimistic sounds coming from Canadian real estate insiders, many of whom are pointing to the upturn in Toronto home sales in the past few months as a sign that worst is over. In reports this week, Re/Max and Sotheby's both declared the city's housing market is returning to growth.
Worst home affordability levels in 28 years
But economic analysts aren't quite as certain as realtors about this rosy scenario.
Rising mortgage rates "will limit how much home resale activity will rebound from its recent cyclical low," Royal Bank of Canada chief economist Craig Wright wrote in the bank's latest housing affordability report, issued Friday.
More from HuffPost Canada:
RBC found the average monthly cost of owning a home in Canada ate up 53.9 per cent of an average income in the second quarter of this year, up from 43.2 per cent three years ago. Over the past year, all of the increase has been due to rising mortgage rates, not rising prices.
The report found home ownership costs in Canada are now at their worst levels since 1990. Fun fact: That was also the year that a massive housing bubble peaked and burst in Toronto, leading to seven straight years of price declines.
Will history repeat itself? Your guess is as good as anyone's, but it's clear we're not out of the woods just yet.