The U.S. Federal Reserve's massive bond-buying program to stimulate the U.S. economy has long sparked fears that it was inflating property prices. But now the Fed has started to wind down its purchases, concerns are rising that "tapering" could generate new risks for global property markets.
The Fed's $85 billion of bond purchases every month had pumped extra liquidity into the world's financial system. All these extra funds encouraged investors to pile into riskier assets – such as property.
This in turn contributed to dramatic house price rises across a number of emerging markets. In 2013, Indonesian house prices rose by 13.5 percent, Turkey's increased by 12.5 percent and Brazil's were 11.9 percent higher, according to global property consultancy Knight Frank's Global House Price Index.
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Liam Bailey, global head of residential research at Knight Frank, said one of the "unintended consequences" of the Fed's stimulus was a global risk of real estate bubbles.
Dubai Marina, UAEJochen Tack | arabianEye | Getty Images
"I think most people would agree – quantitative easing, low interest rates – has been a contributory factor to the recent house price growth," he told CNBC.
In December, however, outgoing Fed Chairman Ben Bernanke confirmed the central bank would begin slowing down to its bond-buying program. This gave hope to those worried about real estate bubbles that there would be a reverse of the house price inflation seen in 2013.
In emerging markets, for instance, many investors are braced for an exodus of funds. These investors could look instead to pile their cash into property assets considered less-risky, according to David Hutchings, head of EMEA research at real estate services firm Cushman & Wakefield, such as those in well-established markets like London.
But he warned that this could, in fact, exacerbate a property bubble in these markets, rather than do the reverse.
"That is a risk… it's something that will only happen over a number of years, so it's not a 2014 risk," he told CNBC. "But without doubt, as people reallocate their money, there will be a risk that they start to pile too much into one particular area such as developed (property) markets."