Insurance News Archive

Interest rate rises cause European housing market to slow

Interest rate rises have stalled growth in the European property market, a report has claimed.

According to the Royal Institution of Chartered Surveyors (Rics) the interest rate policies of the European Central Bank coupled with general rises in interest rates has resulted in a slowing of the continent's housing market.

Professor Michael Ball, the report's author, said: "The often repeated dilemma currently facing monetary authorities is that slowing economies - and housing markets - need lower interest rates, but higher inflation is against them."

Although property prices were recorded to have fallen from October 2007 onwards, anticipated cuts to interest rates should limit subsequent price reduction, the report added.

In spite of these claims, the UK was found to be one of a few European countries to experience noticeable drops in borrowing levels.

The credit crunch does not appear to have affected much of the continent, with all markets experiencing upward movements in house prices with the exception of Germany and Ireland.

But the final quarter of last year saw a sharp reduction in the rate of house price growth, which is likely to continue for much of 2008, the report said.

05 Mar 2008