However, the Royal Institution of Chartered Surveyors' annual European Housing Review says that house price rises are mainly over and, even in Ireland, the property market is showing signs of cooling off after a seven-year boom. Prices have gone flat in Scandinavia, Benelux, France, Italy and Germany but with no signs of a market collapse.

Prices are still rising in Greece, Spain, Switzerland and the UK, but in Spain there are fears that prices could reach unsustainable levels.

Meanwhile, cuts in interest rates have created a remortgaging bonanza. Lower rates encouraged huge numbers of EU home owners to remortgage in order to escape high fixed-interest debt or to release equity to finance other elements of consumption.

The cheaper mortgages and level of housing equity withdrawal contributed significantly to sustaining consumer demand and keeping Europe out of recession.

But the extra borrowing has stretched personal finances and left home owners vulnerable to interest rate rises. Central banks and other financial authorities in the EU have issued warnings to lenders but so far this seems to have had little effect.

A slow response to rising demand, which characterises housing market upswings, is a major problem in Europe. This situation is causing affordability problems that are fast becoming pressing policy issues

Instant Insights /

European Residential Waves Goodbye to Good Times

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