There are signs of a recovery in some of the residential housing markets across Europe, particularly in sales and prices, according to the Royal Institute of Chartered Surveyors (RICS).

Five countries saw house prices rise in 2009 with Norway leading the way with average price increases of +12%. Finland followed with an +8% rise and then Sweden which saw a +7% increase, whilst Austria and Switzerland only saw modest rises although they have yet to experience a price downturn.

Professor Michael Ball of RICS, said: "The shallowness of the downturn in core European housing markets has surprised many commentators. But Europe is not the USA, and the problems and policy responses have been different. Mortgage defaults have only risen modestly. Low interest rates and central bank support for mortgage markets have played key roles in bringing recovery.

“However, huge problems unfortunately remain. Housing markets around the fringe of Europe are still dragging down economies in a vicious circle and all European housing markets continue to face credit constraints and great uncertainty.”

Germany , Italy, the Netherlands and France saw relatively moderate falls between -4-6% and though the markets are still fragile, they are starting to stabilise and to see some price growth as low interest rates and reviving economies across much of Europe has helped prevent housing market meltdown.

However, there are some countries which have vulnerable economies and as such will continue to experience depressed markets and falling prices. The worst performing markets of 2009 were Ireland, Spain, Greece and most of the CEE countries, with the Baltic States especially suffering, seeing prices decline between -27-53% in 2009. Geographically, together they form an unlucky horseshoe around the edges of Europe, according to RICS.

Simon Rubinsohn, RICS’ chief economist, said: “A combination of extraordinarily low interest rates and a raft of government measures have helped to put a floor under residential property markets in most European countries.

“A firmer tone to the macro news flow is also providing a layer of support with clear evidence that an economic recovery is now under way. Indeed, in a number of cases the boost to liquidity has pushed prices back in the direction of previous highs. However, other housing markets are continuing to labour. In particular, the overhang of supply remains a drag in Spain and Ireland. “

The majority of European house-building industries, with the exception of Germany and Switzerland, are still suffering from the impact of the global financial backlash and housing supply will not recover for some time.