UK housing market among most improved in Europe

The UK was among only five European countries that saw house prices rise last year according to the 2010 RICS European Housing Review.

Prices in the UK rose by 1% in 2009 overall, but by 10% since their lowest point in April. Norway led the way with a 12% rise, followed by Finland (8%) and then Sweden (7%).

The Review also shows that a significant number of European residential markets were starting to show signs of recovery, especially in sales levels and prices, as early as spring/summer last year, and that further revival is expected this year.

Low interest rates and reviving economies helped to avoid housing market meltdown across much of Europe. In Germany, Italy, Netherlands and France, last year’s falls were relatively moderate (between -4% to -6%) and though today markets are still fragile, they are starting to stabilise and to see some price growth.

However, RICS expect that countries with vulnerable economies will continue to experience depressed markets and falling prices. The worst performing markets of 2009 were Ireland, Spain, Greece, most central and eastern European countries, and especially the Baltic States where prices declined between -27% to -53% in 2009.

The Review also states that with the economies of Europe only showing weak signs of growth, house prices will be held back – especially if unemployment continues to rise. Most European house building industries, with the exception of Germany and Switzerland, are also still suffering the impact of the global financial backlash and housing supply will need time to recover.

Professor Michael Ball, the report’s author, said:

“The shallowness of the downturn in core European housing markets has surprised many commentators. But Europe is not the USA, and the problems and policy responses have been different. Mortgage defaults have only risen modestly. Low interest rates and central bank support for mortgage markets have played key roles in bringing recovery.

“Huge problems remain unfortunately. Housing markets around the fringe of Europe are still dragging down economies in a vicious circle and all European housing markets continue to face credit constraints and great uncertainty. ”

The full report and summary is available online here.