|European house prices fell in the fourth quarter of 2012, but Britain bucked the trend as property values rose, official figures showed on Thursday.
The 17-member Eurozone saw a 1.8pc annual decrease in house prices in the final three months of the year, while the 27-nation EU suffered a 1.4pc drop, according to figures from Eurostat, the EU’s statistical office
Britain went against the trend showing a 2.3pc jump in property prices in the fourth quarter. However, the UK did see a small drop of 0.7pc between October and December, in line with the EU average. Compared with the third quarter of 2012, house prices in Q4 fell 0.5pc in the Eurozone and 0.7pc in the EU as a whole.
Analysts warned that the figures appeared too optimistic. Ed Stansfield, chief property economist at Capital Economics, said: “The numbers look suspiciously strong compared to figures produced here, which tend to say the house prices were flat. So it might be that the EU numbers are over-inflating London which is doing well, as foreign money has come into the city and it is seen as a safe haven.
“The underlying reality is that outside of London, the UK market is still extremely flat and large parts of the market are seeing steady downward drifts. With the outlook of the economy looking very soft, it’s hard to see what will change that.”
Spain suffered the biggest hit to house prices which tumbled 12.8pc, followed by Romania with 9.1pc and Slovenia at 8.8pc, between October and December versus the same period in 2011.
This comes after the European Commission hammered Spain and Slovenia on Wednesday for having “excessive” imbalances in their debt, unemployment and growth, which are doing long-term damage to the economy.
Slovenia is trying to avoid being the next country to need a bail-out, following the €23bn rescue package for Cyprus. According to the Organisation for Economic Cooperation and Development, Slovenia’s mostly state-owned banks have one of the highest bad loan ratios, where debtors are behind on payments by more than 90 days. The figure stood at 14pc in October 2012, the equivalent of 19pc of the country's gross domestic product.
Spain is still suffering from the effects of the burst property bubble, which stopped economic growth, left banks with trillions of euros of bad loans, and is responsible for the 26.2pc unemployment rate in the country.