European property began to freeze over last year, with almost every European housing market taking a turn for the worse and prices tumbling fast in Ireland and Germany, new research shows.
The majority of housing markets slowed sharply last year, according to the annual European housing review from the Royal Institution of Chartered Surveyors. Cyprus and Iceland were the only countries to buck the trend, while prices in Poland soared for another year, as money earned by immigrants in the UK poured back into Eastern Europe.
Experts warned that there would be worse to come this year and the next, with prices tumbling in the UK recently and expected to drop in Spain in coming months.
The property review, whose leaderboard has been dominated by Eastern European countries in recent years, saw Poland take top spot again, recording 28pc increases in property prices. Estonia, however, which topped the board two years ago, saw prices fall narrowly over the year, and RICS warned that similar scenes could soon be afoot in Poland.
"The reality of post-summer market conditions offered a sharp wake-up call. Oversupply issues have arisen due to an overhang of unsold property and the swift shift made by foreign investors’ from ’buy’ to ’sell’," it said.
Prices rose by 15pc in both Cyprus and Iceland, but elsewhere there were few big increases. Prices in the UK rose by 8pc in the year, however, the report’s author, Michael Ball, warned that this year would be far harder as the effects of the credit crunch hit consumers.
"There are prospects for some house price falls during 2008 but the scale of any housing market downturn is likely to be far less than the last downturn in the early 1990s," he said, adding: "The UK housing market looks much better placed than many others in Europe because of the greater interest rate flexibility
