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European housing recovery is not on the horizon but prices remained stable


29 Feb 2012


Euro & Finance

Slowdown in the global economy and the eurozone debt crisis affects mortgage markets and housebuilding across Europe, whilst prices in the residential sector weathered better the storm, according to the latest RICS European Housing Review, launched in Brussels today (28 February 2012). 

In 2011, prices in most European housing markets were flat or simply declined moderately, only slowing towards the end of the year. The most notable changes were reported in Switzerland, Norway, Iceland and France, where house prices experienced price rises of more than 5%.  Meanwhile Ireland, Spain and Cyprus registered again the sharpest falls, as a result of their severe new supply overhangs and economic problems.

In France, stimulus measures undertaken by the government helped to push up home prices and stop residential building decline. But signs of slowing were apparent late in the year, when many incentives were withdrawn to cope with France’s public deficit.

In the Nordic countries, strong price growth experienced previously ended in 2011, with the exception of Norway and some recovery in Iceland. Sweden and Denmark even experienced moderate price falls.

The research shows a dramatic fall in the number of homes being built since 2007 across much of Europe, including in those markets with no supply overhang. Spain (-89 per cent) and Ireland (-86 per cent) registered the sharpest declines in residential building permits being granted, with only Switzerland experiencing an increase in the last five years.

Moreover, the deep economic downturn and especially the eurozone debt crisis forced banks to pull back their mortgage lending by the end of 2011. With weaken economic growth and cutbacks in state expenditure; less confidence was apparent in Europe’s residential markets at year end.

The report's author, Professor Michael Ball, said:

“Outside of a few countries, house prices in 2011 were relatively stable across Europe and in the absence of new dramatic turmoil, major falls are not expected in the months to come. However, after five years of European housing downturn, full recovery is not on the horizon.

The future of the housing market in Europe will clearly depend on a good supply of mortage credit and the ability to cope with the economic and financial crisis in the Eurozone. But on-going austerity measures are not helping to ease the situation. Public intervention today is more likely to undermine, rather than stimulate, the residential market.”


Notes for editors:

Michael Ball is professor of Urban and Property Economics at the Department of Real Estate and Planning at the Business School at Reading University.

The full report and summary is available online at:

*House price data are only available for graphical reproduction upon request.

Laura Lindberg

Public Relations Manager

RICS Europe

67, Rue Ducale, 1000 Brussels, Belgium

T +32 (0)2 739 42 27; M +32 (0)486473345;

F +32 (0)2 742 97 48



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