House price inflation in the European Union will continue climbing this year with the sharpest rises shifting from south to north of Europe.
Britain's Royal Institution of Chartered Surveyors found EU newcomer Estonia topped the property inflation league in 2005, with prices up 28 per cent, closely followed by Denmark which saw houses increase by 22 per cent in value.
Spain and France, which posted the highest house price increases in 2004, dropped to third and fifth places respectively, boasting property inflation of 15 and 10 per cent.
Ireland's prices increased by nearly 10 per cent despite predictions of a slowdown but this was only enough to secure seventh place in the ranking.
Sweden, enjoying strong economic growth and interest rates at low levels despite two recent increases, squeezed between them, with house price inflation of 12 per cent last year.
"Northern Europe saw some of the strongest house price rises last year, so the centre of gravity of Europe's house price inflation seems to be heading north," the report's author, Professor Michael Ball, said.
The European Central Bank has consistently warned about unsustainably fast house price growth in parts of the euro zone and has raised interest rates twice since December with the prospect of more to come. But RICS predicted the European housing market would continue growing strongly in 2006 despite the likelihood of costlier borrowing rates.
"We expect the European house price boom to run into its eighth year in 2006," said Milan Khatri, RICS chief economist.
"Further interest rate rises by the European Central Bank are certain (but) ... as mortgage interest rates are likely to remain at close to historically low levels, any talk of a real European housing market slowdown is premature."
Of 18 countries surveyed by RICS, Britain's property professionals body, 12 saw house prices rise by seven per cent or more last year. France was the only one of the EU's big four economies to see double digit price increases.
"Germany's long moribund house prices stayed flat, while an expected Italian recovery was short lived," RICS said in a statement. "The UK's famously active market was quiet in 2005 after responding to Bank of England-led efforts to slow it down the previous year."