Could quantitative easing cause house price bubbles?

Quantitative easing measures in Europe could be fuelling a house price bubble in several countries, Moody's Analytics has warned.

The report by the credit ratings agency says that the monetary policy adopted by the European Central Bank to stimulate the flagging economy could see the risk of price bubbles return once again. Indeed, in Norway, prices have risen over 30 per cent since 2010, while Germany and the UK have seen prices climb 25 per cent and almost 15 per cent respectively.

Anna Zabrodzka, the author of the report, is quoted by the FT: "While bond markets have experienced a correction and yields on German sovereign debt climbed recently, they are still extraordinarily low. This has encouraged investment in the property market, which yields a higher return."