The market forecast for Europe for 2008 varies from west to east, just like most meteorological forecasts. In Britain the mood will mostly be depressing; in the continental Western Europe the countries will be divided between moderate growth and stagnation; in the Eastern Europe the moderate growth will dominate unless the 'virus' of unusually strong performance leads to backlashes; in Russia the big oil will continue pushing the market. In general, the continent will react differently to the new world financial situation; the previous market levels and the level of governmental intervention will finally determine the market developments in the coming 2008.

Britain is indisputably the European country that is influenced mostly by the United States. The high level of fusion between the financial markets as well as the convergence between the economic models of these two countries makes easier to explain why when America is moving in one direction, Britain usually is following closely. So, there isn't particular enigma why the recent financial crisis on the residential market in America influences Britain more than any other European country. The liberal economic model and the high market levels in Britain explain why, given the market environment, the mood for 2008 will remain depressing.

In the continental Western Europe, or among the old EU nations, the mood will be slightly more optimistic, but the situation will hardly be uniform across the region. These countries are usually much less influenced by the trends in the United States. The influence is usually indirect, through the trade flows that will hurt the European exporters and thus affect the local economies and the purchasing power of the middle class. The corporative economic model makes possible, to a certain degree, some governmental intervention in order to compensate for the lack of internal demand. The financial criteria imposed by the membership in the Eurozone, however, will make these interventions less effective than in the good old days. Nevertheless, if there is any negative influence coming from America, it will be mild for the year to come.

The Eastern Europe is still a player that must catch up with more advanced economies of the West. The inflation in the region is still high, sometimes double-digit. The strong real estate market development partly explains why the inflation is so high. The economic models on paper are very liberal; the governments, however, remain capable of influencing the markets by sending strong political signals making the demand particularly strong in some areas or in some market segments. For the region, in general, the moderate optimism will dominate in 2008; this general impression will hide significant fluctuations between countries and between regions within some countries.

In Russia, the only unknown factor will be the world oil price, because at the end, it determines the markets, including the real estate market. The world oil market, on the other hand, is a function of many other unknown factors, e.g. the economic performance of the largest oil importing countries (United States, China, and Western Europe). As all scenarios are possible, from moderate recession to moderate growth, so all scenarios are possible for the market development in Russia, from moderate growth to depression. In Russia, however, the government is a very serious factor. Until after the presidential election two months from now, everything will be done in order not to allow any market turmoil. The strategy not to allow any sudden move on the market will be kept even after the election. The political legitimacy of the current oligarchy is closely linked with the sense of security it can provide to the general population.

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