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House prices in the capital are at risk of a bubble, the ranking suggested. (Source: Getty)
While Toronto came top of the ranking, with a score of 2.12, London came sixth, with a score of 1.77. At the bottom of the ranking was Chicago, with a score of -0.66, meaning it is undervalued.
Prices in the capital are being pushed up by mortgage rates at "all-time lows", while the help to buy scheme has kept demand high. However, the luxury end of the market faces oversupply, the research warned.
Still - it's not as bad as other European cities: Stockholm and Munich were both seen as more "bubbly" than London, with scores of 2.01 and 1.92 respectively. Amsterdam was lower, though also in bubble territory with a score of 1.59, while Paris, Frankfurt and Geneva were seen as overvalued, and Milan was fair-valued.
Source: UBS Wealth Management
London's house price slide
The research suggested when adjusted for inflation, the capital's house prices are almost 45 per cent higher than they were five years ago, and 15 per cent higher than before the financial crisis. Meanwhile, real incomes are 10 per cent below their levels in 2007.
"[Sterling] depreciation can make for an attractive market entry point for foreign investors, whose impact, however, should not be overstated," it said.
"We think London house prices may stabilise in the coming quarters. Low affordability, the economic slowdown and uncertainty about the UK’s relationship to the EU are keeping demand in check. On the other hand, we expect supply to slow further this year, considering the decline in housing starts in [the first quarter of this year].
"We continue to advise caution given high market valuations and enormous political uncertainty."