AP Photo/Domenico Stinellis

Moody's Analytics has warned that the European Central Bank's €60 billion-a-month quantitative easing (QE) programme might be creating a housing bubble in the UK, Germany and Norway, according to The Financial Times:

Anna Zabrodzka, the author, said rising prices and the ECB’s €60bn-a-month asset-buying programme have caused “the risk of house price bubbles” to “resurface”.

... The rises are buoyed by rapid growth in big cities such as London, Oslo and Munich, where properties are “becoming increasingly overvalued”, it added.

The QE programme (worth about $65 billion /£42 billion per month) brought in by ECB chief Mario Draghi, is intended to flush new, cheap money into Europe's economy through a series of bond purchases.

Europe's economy is uneven and fragile — with Southern Europe countries like Greece, Spain, Italy and Portugal still either in recession or barely coming out of it.

But QE is a blunt weapon: The new money gets into the system, but the ECB cannot ensure that loans are invested in areas where they may be most needed. The overall effect is that it lowers bank interest rates to zero, making it easy for anyone who wants to borrow money, in the good economies as well as the bad ones.

And the people doing the borrowing are home buyers in Northern Europe, attracted by low interest rates on mortgages, Moody's says. Here's a snapshot of property prices:

Average house price increases since 2010:

In the UK, London is most suspected of being in a property bubble right now. The average price of a house there right now is nearly £600,000, and mortgages are being offered at roughly five times the average income of London buyers, according to the Office for National Statistics.