Property prices fall across Europe
Homeowners across Europe saw the value of their properties slide last year as demand for new homes plummeted because of the impact of the credit crisis on mortgage supply in the major economies.
House prices were falling in every European market by the end of 2008 when adjusted for inflation, according to the Royal Institution of Chartered Surveyors, although a few such as Greece and the Netherlands were still slightly positive for the year as a whole after initial growth.
Core markets are set to suffer “marked downturns” in 2009, according to he report, written by Professor Michael Ball, who blames significant falls in mortgage lending, coupled with the economic downturn.
Professor Ball said: “The world financial crisis and economic downswing have hit European housing markets badly. Some countries, like Ireland and the UK, led the decline but by the last quarter of 2008 the effects had spread across Europe.
“There is greater synchronisation of housing market decline in Europe than has been seen in the past and there are going to be some tough times before marked recovery occurs.”
Rics said that any future revival of European housing relies on the ability of European governments to cope with the mortgage credit shortage as well as the scale of the economic recession.
The UK was one of the worst performing markets, where house prices fell 16 per cent in 2008, second only to Baltic states such as Estonia, where prices dropped 23 per cent but which has a relatively small residential market.
The UK housing market continued to weaken last month according to the Halifax house price index yesterday. Prices fell by 2.3 per cent in February, more than reversing an upward bounce in January. In the three months to February, the decline was 3.6 per cent.
House prices also fell significantly in central and eastern Europe, Ireland, France and amongst the Nordic countries last year.
In contrast, previous years saw house prices in countries such as Estonia as well as Scandinavia, central and eastern Europe and parts of the Mediterranean outpace other European countries.
Rics said that even those economies that did not experience a boom in house prices have not been spared from the squeeze in the market. In Germany and Austria, it said, a lack of credit has hit demand and it predicts a further fall in house prices and activity in 2009. Sales also declined in Italy, where mortgage growth was negative in 2008 for the first time in more than a decade.
Spanish house prices surprisingly recorded only moderate price falls. In central and eastern Europe, Rics said that the worsening financial turmoil has hit residential markets very hard, with both transaction levels and prices down significantly.
From: Financial Times
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