Moody's says the €60 billion-a-month QE program is creating a housing bubble in Europe
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:
- Norway: 30%
- Germany: nearly 25%
- UK: nearly 15%
- Source - Moody's via FT.
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.
- Love in the time of elections: Do politics spice up or spoil dating in India?
- Samsung Galaxy S24 Plus review – the best smartphone in the S24 lineup
- Household savings dip over Rs 9 lakh cr in 3 years to Rs 14.16 lakh cr in 2022-23
- Misleading ads: SC says public figures must act with responsibility while endorsing products
- Here’s what falling inside a black hole would look like, according to a NASA supercomputer simulation
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market