House prices in Ireland have fallen faster than other European countries according to a new report from the Royal Institution of Chartered Surveyors (RCIS) said.
The report which examined 21 European housing markets found that the cost of an Irish home fell 7 per cent last year. House prices in Germany showed the next sharpest fall after Ireland, declining 6 per cent over the same period. Only five countries showed a fall in house prices.
The report blamed the eight successive interest rate rises for the price falls, rather than the credit crunch and predicted a further downturn in 2008. The rate has remained at 4 per cent since then.
Central banks have raised interest rates to address accelerating inflation, which has almost doubled in the euro region since September 2006. The euro zone inflation rate now stands at 3.2 per cent, up from 1.7 per cent only 16 months earlier.
Britain's housing market was adjudged to be better placed than most countries to experience only a limited fall in prices, although the report notes that the credit crisis has had the most pronounced impact on Britain.
"The scale of any housing market downturn is likely to be far less than the last downturn in the early 1990s,'' wrote Michael Ball, Professor of Urban & Property Economics at Reading University in the UK, which conducted the study.
House prices in Ireland fell by 0.7 per cent in January and over the year may fall an further 5 per cent according to Irish Life & Permanent.
Another market facing a sharp slowdown in 2008 is Spain, according to the RCIS.
Poland saw the highest house price increases last year, rising 28 per cent the survey found, although it noted that the gains were tapering off as a construction boom has led to a surplus of unsold properties.