Britain’s house prices are among the fastest growing in the world, according to the most recent Knight Frank Global House Price Index. Norway, Australia and the UK saw the biggest price rises, climbing the ranks of the index by 12, 10 and 9 places respectively. Meanwhile average global house price inflation has slowed since last year ? falling from 10.9% in September 2005 to 8.4% in September 2006.

Hong Kong, the USA and Italy have all moved down the ranks; America’s house price growth has fallen from 12.7% to 5.7% over the last 12 months. Five countries in the 32-strong index recorded negative price growth quarter: Hungary (-1.0%), Portugal (-1.2%), Japan (-2.2%), Hong Kong (-2.6%) and Germany (-3.0%). ‘The question of whether the US market downturn will turn into a more general national economic downturn is still uncertain,’ says Liam Bailey, head of Knight Frank Research, ‘however new mixed data on the housing market suggests that demand has recovered some ground since early Autumn’.

European countries are recording the biggest growth, according to the report, with the recent and proposed accession states such as Bulgaria and Latvia, particularly strong performers. ‘The general trend is that global residential markets continue to experience slowing but positive growth in spite of concern about increasing affordability issues, mounting household debt and market sustainability,’ explained Mr Bailey.

Although price growth has slowed in most markets, Knight Frank is confident the underlying demographic, economic and financial fundamentals remain healthy and a hard landing is unlikely. ‘The appetite for second homes, whether for personal use or for investment reasons, continues unabated, facilitated by ever increasing accessibility via new low cost air routes and the growth in supply of residential properties in both the mass and luxury sectors,’ Mr Bailey said, adding that prospects for 2007 appear ‘upbeat’.

‘With no obvious major international shocks visible at this point in time and a continuing broadly benign economic and interest rate environment likely, we see both buyer confidence and appetite remaining firm,’ he continued. ‘We expect the global market to be aided by better news from the US in 2007, with US growth hitting a low of 0% to -2% in Q1 2007 before a slow recovery through the rest of the year’.