The UKs longstanding position at the top of the European League of house price inflation ended last year, according to the Royal Institution of Chartered Surveyors.
The RICSs European Housing Market Review showed the UK slipping to joint third place, the same as Ireland, with a 15 per cent increase. France came top with an annual increase of 15.5 per cent. Spain came second with 15 per cent.
As the only country to have experienced significant interest rate rises in 2004, the RICS says the UKs six-month market slowdown is likely to lower Britains house price inflation rate further.
RICS economist Milan Khatri says: “Low interest rates have been the principal driver of rising house prices in many countries, despite some quite moderate economic performances. Any sustained increase in interest rates takes the steam out of markets, as seen in the UK over the last year.”