The UK's longstanding position at the top of the European League of house price inflation ended last year according to The Royal Institution of Chartered Surveyors (RICS)'s European Housing Market Review, to be published in full on March 3rd.

Europe's housing markets continued to grow during the course of the year, with France topping Europe's house price inflation table, followed by Spain, which slipped into second place, and then the UK and Ireland. The Netherlands, Switzerland, Germany and Austria occupy the bottom of the table, with Greece in bottom place.

The report, now in its sixth year, includes data and analysis on the 10 accession countries in Eastern Europe as well as Portugal for the first time.

The study points to a three speed Europe, with France, Spain, the UK and Ireland all occupying the fast lane with double-digit inflation figures.

They are followed by a middle group of six countries, with a house price inflation of around 5%. The bottom group has a house price inflation figure somewhere between 0 and 2%.

As the only country to have experienced significant interest rate rises in 2004, the UK's six-month market slowdown is likely to lower Britain's house price inflation rate even further. Britain is also the only country featured in the report to see its new mortgage market contract, compared to other countries where mortgage lending increased as householders take advantage of low interest rates in mainland Europe.

France's house price inflation jumped from the low to mid-teens in 2004.

Germany and Austria's house prices may rise in the near future after remaining stagnant for some years, especially in Germany where government policy is now promoting home ownership over renting.

According to RICS' economist, Milan Khatri, "Low interest rates have been the principal driver of rising house prices in many countries, despite some quite moderate economic performances. Any sustained increase in interest rates takes the steam out of markets, as seen in the UK over the last year."

Strong housing markets are not unique to Europe, as witnessed by a considerable boom in both the USA and Australia in recent years. 2004 saw US house price inflation accelerate, reaching a double-digit percentage rise for the first time in 25 years. Australian house price rises, on the other hand, have slowed rapidly due to the effects of rising interest rates.