This Barclays chart shows the most fragile property bubbles in Europe

LONDON - Years of low interest rates have created a surge in demand for property and a corresponding hike in prices across much of Europe.

Property bubbles, or "vulnerable" real estate markets, have built up in eight countries, which received warnings from the European Central Bank's systemic risk board last November.

According to Barclays credit analysts, the build up of stresses will intensify in 2017 because the remedies are targeted at banks' lending practices rather than the central bank interest rate.

Here is Barclays (emphasis ours):

"In particular, monetary policy is excluded as a policy tool to address macro-prudential concerns related to low interest rates. Thus, based on persistent monetary accommodation by the ECB, imbalances in EU housing markets seem very likely continue to build up in 2017.

"This creates some headline risk, but as long as interest rates remain low, a major downturn is unlikely, in our view."

The European Systemic Risk Board's scoring model gives Sweden's real estate market the highest danger level, at 2.2, while the UK comes in third place with 1.7. The ranking measures asset prices, risk-taking by banks and the level of oversight from the domestic financial regulator.

The countries that received warnings from the ESRB are Austria, Belgium, Denmark, Finland, Luxembourg, the Netherlands, Sweden and the United Kingdom.

Here is the chart from Barclays showing the biggest bubbles:

On Tuesday the Organisation for Economic Cooperation and Development sounded the alarm on global property prices and warned that a big correction could be on its way.

Catherine Mann, the OECD's chief economist, singled out Canada - where average property prices have more than doubled since 2000 - and Sweden, which HSBC said was "skating on thin ice" in 2016, as particularly concerning.