Growth in European house prices is set to continue in 2005 according to the Royal Institute of Chartered Surveyors (RICS).

RICS found that the property market across Europe grew in 2004, with France, Spain and Ireland seeing property value growth in excess of 10%. Only Austria and Hungary had a relatively poor property market last year. Belgium, Italy, Sweden, Denmark, Finland and Portugal all saw price rises of between 5% and 8%.

While properties in the new EU countries in central and eastern Europe are more affordable compared to other parts of Europe, RICS has urged foreign investors to recognise the higher risk involved in investing in a relatively untested market.

For 2005, the report forecasts that property prices are set to continue rising, with conditions cooling towards the end of 2005.

Chief economist at RICS, Milan Khatri said: "Very low interest rates and increased competitive pressures in the mortgage industry are delivering solid growth in lending, which is likely to continue through much of 2005."

Michael Ball, author of the report, added: "Low interest rates are likely to continue to stimulate housing demand across Europe in the first half of 2005. Yet changes may occur towards the end of the year as pressures for increases in eurozone interest rates grow and new housing supply continues to come on stream in EU markets."