Europe’s housing market showed no signs of cooling in 2006, with the majority of countries experiencing double-digit house price inflations. The latest RICS European Housing Review showed the housing markets in the UK and Ireland both prospered but it was Poland, Bulgaria, Romania and Scandinavia which witnessed the biggest price rises. ‘Something is clearly afoot in northern Europe,’ said Professor Michael Ball, director of Urban and Property Economics Consultancy and author of the RICS report.

2006 was widely predicted to be the year when housing market across Europe cooled: ‘Interest rates were on the up. Affordability was increasingly stretched. Yet most Europeans ignored such inconveniences during the year and continued to bid up the price of their new homes,’ said Prof Ball. Britain’s property market led the ‘big four’, outperforming Germany, France and Spain whose markets slowed during the course of the year. But the driving force behind European property growth in 2006 came from Scandinavia, and the smaller central and eastern European countries, Poland and Bulgaria. ‘It is notable that a number of smaller countries were leading the price surges,’ commented Prof Ball.

According to the survey, Poland is now one of Europe’s biggest investment hot-spots. In Warsaw and Krakow prices rose by at least third in 2006. ‘The country now has one of the fastest economic growth rates in Europe and such a buoyant economy is being reflected in housing market activity,’ said Mr Ball.

A rising amount of foreign investment has caused high demand, far outstripping supply.

Professor Michael Ball concluded: ‘In the main, Europe’s housing markets had another strong year. The long predicted soft-landings have yet to materialise, with the European Central Bank interest rate rises having little effect in the Euro-zone so far.’