House price growth across Europe slowed sharply in the second half of 2007, according to a report.
A UK charity says a new safety net is needed for homeowners
A survey by the Royal Institution of Chartered Surveyors (Rics) said rising interest rates, not the credit crunch, were the prime reason for the slowdown.
It predicted a further downturn in markets across the continent in 2008 but said that the UK was better placed than most for prices to stabilise.
House prices rose fastest in Poland in 2007, but fell the most in Ireland.
Rates vs credit crunch
The Rics European Housing Review blamed rising interest rates for the housing market weakness.
But it said that rates were not rising as fast as they had during previous housing market downturns and added that "this gives optimism that the current 'correction' would not be too great".
Europe's economy was in much worse shape during the last housing market crisis in the 1990s, it added.
"The European economy is still in good shape ... The combination of markedly higher interest rates and a sudden, sharp recession, which last sent Europe's housing markets tumbling in the early 1990s, is still remote," it said.
But with inflation in the eurozone higher than the European Central Bank target of 2.0%, interest rates could rise again. With variable rate mortgages common in countries such as Ireland and Spain, homeowners could be hard hit.
"Housing market prospects in 2008 depend on what happens to interest rates," it said.
The report said that banks, monetary authorities and commentators all said the sub-prime mortgage crisis in the US was unlikely to be repeated in Europe given the difference in the mortgage markets between the two continents.
Prices fell by an estimated 7% - nearly a tenth in real terms - in Ireland last year, the biggest fall reported in the survey.
THE REVIEW IN NUMBERS
7% - fall in house prices in Ireland in 2007
200% - reported real house price rises in the Baltic States in 2000-2006
40% - fall in permits to build new homes in Germany in 2007
One-fifth - houses put up for sale in Ireland in January 2007 that were still on the market 10 months later
One of the EU's smallest member states, Cyprus, bucked the trend as house price rises accelerated in 2007, possibly owing to the prospect of joining the euro and the influx of foreign investors.
The Baltic States, where prices soared between 2000 and 2006, saw early-year price rises wiped out later in the year, particularly in Estonia and Latvia.
Poland recorded the highest rate of house price increases in 2007, but sales of newly-built apartments in Warsaw fell later in the year, the review said.
House price inflation fell in the UK, the Netherlands and Sweden in the second half of 2007.
The UK market remained one of the strongest in Europe in 2007 and further UK interest rate cuts in 2008 are likely to have a positive impact on housing demand, the report said.
In a separate report, the Joseph Rowntree Foundation called for cheap insurance for homeowners most at risk.
Fewer than one in five people have private insurance to protect them against sudden loss of earnings owing to unemployment, sickness or an accident. This is far below the government target of 50%.
The charity proposed a cheap insurance scheme which would cover mortgage repayments for ten months after a sudden loss of earnings.
The cost of this scheme would be split, with borrowers paying for half and lenders and the government covering the rest.