House prices held up well in 2011: RICS

The dlowdown in the global economy and the eurozone debt crisis is affecting mortgage markets and housebuilding across Europe, but prices in the residential sector are weathering the storm better, according to the latest RICS European Housing Review launched this week.

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 again registered 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 But signs of slowing were apparent late in the year, when many incentives were withdrawn to cope with France's public deficit.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 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%) and Ireland (-86%) registered the sharpest declines in residential building permits being granted, with only Switzerland experiencing an increase in the last five years.