Housing prices across Europe continued to fall in 2009, with only five countries in the 24-nation zone seeing their average home values rise.
But there was some optimism for Europe’s housing market in 2010. While the first half of 2009 “was full of gloom,” the second half of the year saw housing markets bottoming out and showing signs of recovery, according to the latest European housing review by the Royal Institution of Chartered Surveyors.
Nordic countries led the charge, with Norway’s home prices rising 11 percent from a year ago thanks to a culture of savings and a strong economy backed by oil revenues that bucked the global downturn in 2008.
Finland and Sweden followed close behind in growth, with home values respectively rising 8 percent and 7 percent. Only Austria and the United Kingdom also saw their home values increase, and a small fraction at that.
But most of Europe has little to celebrate, according to the latest European housing review by the Royal Institution of Chartered Surveyors.
"Huge problems remain, unfortunately. Housing markets around the fringe of Europe are still dragging down economies in a vicious circle, and all European housing markets continue to face credit constraints and great uncertainty,” wrote the report’s author, Michael Ball, a professor of urban and property economics at the University of Reading, UK.
Latvia was the biggest loser in 2009, seeing home values plummet 53 percent on top of a fall the previous year of 30 percent. Fellow Baltic states Lithuania and Estonia also saw home prices fall about 30 percent over the year.
Meanwhile, the US continues to see home prices fall.
“European countries have automatic stabilizers when their economies start to slide; ones that are fairly strong relative to those in the USA, given the strength of welfare states, job protection, and unemployment pay schemes,” Professor Ball writes in the report.
Also, the US has higher penalties for failing to keep up with mortgage payments, causing more distressed home sales and a glut of empty homes.
“The experience of Ireland, Spain, and some central and eastern European countries has been more similar to that in the USA in this supply-side respect.”