Europe's two speed housing market, 2003 was a year of contrasts in the European housing markets. Here is the RICS indepth and unique report.

More European countries experienced double-digit house price inflation last year than in the previous year, with the booming markets in Spain and the UK joined by France and Ireland, according to the latest RICS European Housing Review).

However, the bad news for homeowners with property in those areas is that none of those countries is expected to keep up such rates of house price increase in 2004.

At the other end of the scale, more European countries’ housing markets also stagnated in 2003, with previously static Germany and Austria joined by the Netherlands and Denmark.

But perhaps the most surprising find is the fact that despite rocketing consumer debt in several countries, national economic slowdowns, and prophecies of doom from some eminent economists, none of the 14 countries studied showed signs of an impending housing market crash.

These are just some of the findings of a unique and in-depth analysis of 14 European housing markets found in the European Housing Review 2004, commissioned and published by RICS this week. The review, written by leading residential housing market economist, Professor Michael Ball, provides an overview of the trends and issues currently dominating a combined housing market of 350 million people, as well as providing invaluable guidance for potential investors in residential property.

Professor Michael Ball highlights the market and social trends working behind the economic data, such as how diverse housing markets are discouraging people from moving freely to work and live in other countries within Europe; the fact that second homes now account for up to 10% of some markets; and why several countries, such as Denmark, Holland and the UK, are so heavily mortgaged.

Milan Khatri, Chief Economist, RICS says: ‘This report shows that mortgage market structures alone do not explain differences in housing market trends. Differences in economic growth, house building, institutional and cultural factors all affect consumer behaviour.

‘The current housing boom in many countries has been exaggerated by poor housing supply, particularly in urban areas, as markets have been prevented from operating freely because of constraining planning systems.”

Further data and comparative analysis contained in the European Housing Review includes:

· Housing markets in economic slowdown
· Mortgage markets
· House price inflation
· Impact of interest rate cuts by the European Central Bank
· Consumer behaviour, sentiment and levels of debt
· Information on housing supply shortages
· National levels of house building
· Levels of social housing stocks