UK house price declines slowed during 2011 as the overall European housing market remained subdued, according to the RICS European Housing Review 2012.
Residential property in the United Kingdom saw overall prices fall by one per cent in 2011. This relatively flat reading places the UK on a similar footing to several other European nations, although Germany, France, Switzerland and Norway all posted rises of five per cent or more. Significantly, Ireland and Spain experienced the most significant falls, with drops of 17 per cent and 10 per cent respectively.
Since mid-2007, overall house prices in the UK have fallen by almost a third, says RICS. This is more significant a drop than seen in Spain (-27 per cent), Italy (-14 per cent), Germany (-11 per cent) and France (-8 per cent), while Sweden and Switzerland have actually seen prices increase in the last five years.
A notable change across Europe since 2007 has been the dramatic decline in homes being built. During this period, the UK saw a 42 per cent fall in residential building permits being granted, roughly in line with the European average. Spain (-89 per cent) and Ireland (-86 per cent) saw the sharpest declines, with only Switzerland experiencing an increase. With housing shortages already being reported across much of Europe, these low levels of construction should only serve to exacerbate the problem.
Much of Europe in recent years has not experienced the same scale of mortgage shortages as the UK. However, the Eurozone crisis helped to generate a marked tightening in mortgage availability in the last quarter of 2011.
Professor Michael Ball of the University of Reading, author of the RICS research paper, commented:
“Real house prices in the UK have fallen by a third over the past four years, due to a combination of a weak housing market and general price inflation. This has been one of the largest declines in Europe and will help to underpin housing market recovery once economic growth picks up again.”
