Since mid-2007, overall house prices in the UK have fallen by almost a third. This is more significant a drop than seen in Spain (-27%), Italy (-14%), Germany (-11%) and France (-8%), 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% fall in residential building permits being granted, roughly in line with the European average. Spain (-89%) and Ireland (-86%) 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 euro zone 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, said: "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."
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