Signs of recovery are visible in some European property markets, especially in sales levels and prices, says the latest RICS European Housing Review. A significant number of European residential markets were starting to revive from spring/summer 2009 and further revival is expected in 2010. Low interest rates and reviving economies helped to avoid housing market meltdown across much of Europe.
Consequently, this looks like it is going to be more limited than the last major one in the 1990s. However countries with vulnerable economies will continue to experience depressed markets and falling prices.
Since house prices bottomed out there have been some quite sharp price recoveries, especially in Norway, Finland, Sweden and the UK; while Austria and Switzerland never experienced price downturns.
The worst performing markets of 2009 were Ireland, Spain, Greece, and most central and Eastern European countries. The Baltic States were hit particularly hard with price falls ranging from 27% to 53% in 2009. Together, these countries form a geographic ‘unlucky horseshoe around the edges of Europe’, according to reports author, Professor Michael Ball.
The economies of Europe are only showing weak signs of growth and this will hold back housing markets, especially if unemployment continues to rise. Oversupply is also likely to hold back recovery in some countries, most notably in Spain, Cyprus and Ireland where both unsold holiday homes and primary residences could bring these markets further problems, the report also points out.
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