After a post credit-crunch dive, the outlook is brightening for a number of European residential markets, but sadly not Spain’s, reveals the latest European Housing Review from the Royal Institution of Chartered Surveyors (RICS).

“The second half of 2009 saw housing markets in many countries bottoming out and showing signs of recovery,” explains the report. This was in no small measure thanks to record low interest rates.

Scandinavian residential markets were positively buoyant. Last year house prices increased by 11% in Norway, 8% in Finland, and 7% in Sweden.

Prices even rose by 1% in the UK, a market that was particularly badly hit by the recession but now appears to have turned a corner. UK property prices are up by 10% from the April 2008 lows.

Prices fell by between 4% and 6% in Germany, Italy, Holland, and France, all key members of the Eurozone. Though not yet in positive territory, the outlook for these markets is improving.

Beaten up

Not so for a tail-end group of the most beaten-up markets including Spain and Ireland, where prices fell in double digits last year and could well fall by a similar figure this year. Prices fell the most in Latvia, down 53%.

One of the big problems in Spain, the report notes, is the glut of 1 million new properties hanging over the market. “In Spain the difficult economic situation doesn’t help the sector, and the high stock level could even make the situation worse,” Amadeu Arderiu of RICS España told the Spanish press.

RICS see a 2-speed housing market recovery in Europe, with Spain firmly in the slow lane thanks to a weak economy and high unemployment.

If the recovery in the more buoyant European markets is sustained this downturn will have turned out far less savage than many feared in 2008.

“If the prevailing evidence is right, the European housing crash
seems to have been relatively short-lived – though several
countries’ housing markets are still in deep trouble. If the same
trend continues, as it is likely to, the European housing
downturn of 2008/9 will have turned out to be far smaller and
more localised than most would have expected in late 2008,
and vastly short of the forecasts of the doomsayers featured
so often in web commentary and the traditional media.”

But RICS does warn the recovery is still fragile and could prove to be a “false dawn”.