Bulgaria, Russia, Poland, Hong Kong and Singapore have all experienced high annual price growth between 2006 and 2007, with Bulgaria coming top for annual capital appreciation according to new figures from Knight Frank.

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However, the rest of the Baltic States didn’t have such a fairytale ending: Latvia and Estonia both suffered negative growth (-7.1% and -14.5% respectively) and Lithuania saw price growth of just under 1%. This is an enormous change from a year ago, when Latvia was seeing annualised growth of 66%, prices in Estonia were rising by 23.8% and by 23% in Lithuania. However, it seems that uncertain employment conditions, rising interest rates and household indebtedness are all large contributing factors in this turnaround.

Globally, house price inflation over the year was 8.2%, down from 9.7% in 2006.

Russia – appearing in the index for the first time – performed extremely strongly, although the results are marked by regional disparity: new build flats in St Petersburg rose by over 75%, with growth in Moscow slower at 27.1%.

Iceland also saw magnificent growth last year, and continued to do so towards the end of Q3 and into Q4 when many other countries were seeing falls in price growth, thanks to a booming economy and the increasing availability of mortgage products, all despite an inflation level of 13%.

In terms of the rest of Europe Sweden, Finland and Denmark all showed solid growth, while UK house prices slowed in the final quarter again showing large regional disparities. Spain also experienced a slowdown, as did France.

In the Far East, however, growth was strong, with Singapore showing price rises of 31%, and Hong Kong 24%. Prices in 70 Chinese cities showed rises of 10.5% over the year.

The South African market continues to slow, with growth of 12.3% last year, while in Canada and Australia saw rises of 15% and 12% respectively. The US market continues to be troubled, as house prices continue to decrease and the pace of decline appears to be increasing. However, these results are also regionally diverse: Utah, Wyoming, North Dakota, Montana and Alaska all saw price increases of over 6%, while the greatest declines were in California, Nevada, Florida and Michigan.

Liam Bailey, head of residential research at Knight Frank, said: ‘This Index shows that while property prices in Europe and America appear to be suffering from the downturn in economic conditions, prices in Asia and elsewhere, notably Singapore and Hong Kong, are performing very well.’


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