Residential markets have shown positive developments across most of Europe, buoyed up by moderate interest rates and active institutional investment, said SI. ‘The trend has been excellent in Spain, Greece and Eastern European countries, especially Poland and the Baltic States, while the northern markets and those in Belgium and France have been stable’.

The European real estate market ended 2006 with an increase in turnover of 3.9 per cent, achieving £455bn euro. The highest increase was recorded in the Spanish real estate market, where turnover rose by 8 per cent.

The beginning of 2007 has been marked by a positive economic climate in the majority of European countries. The increase in GDP in the European Union reached 2.5 per cent in 2006, surpassing by a large margin the forecasts made halfway through the year, and it is estimated that the figure for 2007 will be around 2 per cent.

The firm expects property sales to increase again this year - by about 4.4 per cent. ‘Spain should maintain and consolidate the exceptional growth of recent years, and 2007 will bring about a more marked upturn in the German real estate market’, said SI.

However, ‘the expectation for 2007 is for a slowdown in price rises in the mature markets, but the emerging markets should continue to grow. An out-and-out property boom is expected in Romania and Bulgaria, thanks also to their entry into the European Union’.
So far as Italy is concerned 2007 has again started in a positive climate with economic growth of at least 1.5 per cent forecast. Inflation remains stable, while the expected increases in the cost of borrowing should not exceed one percentage point, said SI.

Last year the residential property sector recorded a turnover of £67bn, ‘fuelled by a strong tide of purchases on the part of immigrants and young couples. The forecasts for 2007 are for a further increase in turnover of 3 per cent, whilst average prices are expected to rise by 3.2 per cent, but with large variations between cities and small towns’.

Household mortgages have more than doubled in the last five years, reaching £135bn in 2006. Despite a slight fall, demand for housing is still strong, calculated as just under 2m households per year, said the research body.

Prices of apartments in major cities