North of the border, past Niagara Falls is the metropolitan city of Toronto, a true melting pot of cultures where real estate continues to thrive amid rising housing prices.

Agents doing business in Toronto may be facing a new problem as Swiss bank UBS reports that the city has the highest risk of experiencing a property bubble – even higher than expensive cities like New York, London and Hong Kong.

“House prices [in Toronto] are making up ground that had been lost to Vancouver,” the bank wrote. “Price growth accelerated last year and reached an excessive 20 per cent year-on-year in the last quarter. Real prices have doubled in 13 years, while real rents have increased by only 5 per cent and real income by less than 10 percent.”

This is the first time that Toronto, Canada’s largest city, has topped UBS’ annual ranking of 20 major cities. Vancouver, on the west coast of Canada, wasn’t far behind.

According to UBS research, housing prices in Toronto have doubled over the past 13 years, while rents have increased by only 5 percent over the same timeframe. Moreover, home price increases have far outpaced salaries.

Source: UBS

UBS researchers indicate that fast-rising property prices in Toronto and other major global cities are being fueled by three main factors, including low interest rates, which make it easier to buy homes; an increase in households that want prime, central housing and can afford it; and new housing construction that can’t keep up with demand.

According to UBS, Toronto has experienced a 20 percent decline in average prices from the peak in April. However, it warns, “a strengthening Canadian dollar and further interest rate hikes would end the party.”

The recipe has industry leaders keeping an eye on Toronto after the housing market failed to stage the September comeback the real estate industry was hoping for.

Amid a pullback in sales and average prices in the wake of Ontario moving to cool the market, realtors were counting on the so-called back-to-school buyer to emerge and set the tone for the fall.

“The market didn’t come back the way the industry was hoping it would,” Lauren Haw, CEO of Zoocasa, explained. “We typically see a major increase in volumes during the fall market.”

Ultimately, agents in the Toronto area may have to be ready to navigate choppy seas with clients in the coming months.