House prices in the UK rose at a faster pace during 2006 than in other major European economies such as France, Germany or Italy, but Europe's housing markets did not cool in 2006 after interest rate rises.

Europe continued to show solid house-price inflation across the board, reported the Royal Institution of Chartered Surveyors' European Housing Review 2007.

In a positive sign for European property investors, local markets failed to follow the lead from across the Atlantic as the US market ground to a halt.  Whilst most markets did not quite reach the highs of 2005, many are still rewarding savvy investors with double digit growth.

Transactions and mortgage borrowing were strongly up through most of Europe

The European Central Bank's interest rate rises have not been fully passed on in higher mortgage rates and seem to be having limited impact on housing markets

The review found UK prices rose by about 10% last year, helped by a sound economy. This compared with a 7% rise in France, 4% in Italy and no growth in Germany.

However, growth in the UK was not as high as in some Scandinavian countries and Central and Eastern Europe. House prices grew by 22% in Denmark, 17% in Norway and 11% in Sweden.

Further east, Poland saw house price inflation in excess of 30%, while property values in Bulgaria and Estonia grew by close to 20%.

The report’s author, professor Michael Ball, said: “In the main Europe’s housing markets had another strong year. The long predicted soft-landings have yet to materialise, with European Central bank interest rate rises having little effect in the Euro-zone so far.”