The big loser, somewhat surprisingly is Ireland, one of the first and most extreme casualties of the global economic downturn. Prices dropped 7% in 2007 after rising 12% a year earlier, according to figures from the Royal Institute of Chartered Surveyors (RICS), a nonprofit property organisation based in Britain.
Spain is also suffering. The housing market there was scorching just a year ago, boosted by overseas demand for the country's sun-drenched villas. But house-price growth slowed to 3% in 2007 from 9% a year earlier.
But in Poland, the EU's fastest-growing housing market, the property market is faring better. It tops the RICS' survey of 21 leading economies in Europe. House prices there grew at the phenomenal rate of 28% in 2007.
It isn't just to do with the subprime mortgage crisis in the U.S. and the ensuing global credit crisis. Rising interest rates set by the European Central Bank (ECB) are largely to blame for last year's downturn.
Experts don't expect stabilization anytime soon. Unlike the U.S. Federal Reserve, the ECB is loathe to cut borrowing rates, which means the effects of the credit crunch have yet to be felt.
It is still too early to say when there will be a turnaround according to Liam Bailey, head of residential real estate research at the London-based Knight Frank. He says Britain's key hot spots are still the glitzy Central London districts of Kensington and Chelsea. But growth even in Britain's capital, which boasts some of the most expensive property in the world, is slowing.
There are some countries, like Bulgaria and Latvia, that aren't on the RICS study because their government statistical departments or housing associations haven't released the relevant figures. But anecdotal information shows that while these housing markets have seen phenomenal growth, even they are on the wane.
There are, however, prime property hot spots generally thought to be safe bets. These include London, Monaco, France's Dordogne and coastal locations like the Cote D'Azure or the Northern Sardinian beach resorts of Costa Smeralda.
