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Global house prices slow

Global house price inflation has fallen to 6.1% from 9.2% at the end of last year, says the latest Global House Price Index from Knight Frank as the number of markets where prices have fallen has increased, although there are pockets of strength. The geography of markets doing well and badly is not clear, found the report, as top performing markets are dispersed around the world, with Bulgaria, Singapore, Hong Kong and Jersey at the top of the list for house price inflation.

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Bulgaria is defying all expectations, and continuing its upward pricing trend with annual growth of over 60%, while the rest of Eastern Europe did not fare so well: Growth in Poland slowed significantly to 3% from 22% and in Latvia inflation dropped by 20%, while Estonia saw a 11% decline in values and Lithuania proved to be the most stable Baltic state with a price rise of 0.5% throughout the year and Croatia saw modest growth of 7% annually. Hungary saw 1.2% of growth, and further west in Scandinavia Sweden has seen strong price rises continue with growth of 9.1%, although in Norway growth is declining quickly: just 3.8% compared with 16.4% the previous year and property in Finland is following a similar pattern.

The Spanish market has actually performed very well this year, contrary to information in the press, with growth of 3.8% and neighbouring Portugal has posted the same figure. France is also exhibiting all the symptoms of beginning to slow down, with annual inflation falling to 2.5%. Meanwhile Germany has recorded a 5% fall in growth.

Switzerland has seen continued strength with a 1.2% rise in prices, and the UK market fell by 1.1%. Across the Irish Sea, prices continue to fall – by 9% – in Ireland as the construction boom comes to an end.

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In Asia things are rather different, although Singapore continues to show remarkable growth rates, up 29.9% from these latest figures and Hong Kong is hard on its heels recording a 29% rise in the same period. In China prices rose by 11.7% and over in Australia they rose by 13.8%.

In the US regionally the picture is diverse, as Midwest states like Wyoming and Utah posted healthy growth, although there was an overall decline of -0.03% while house price inflation in Canada has halved from !2.65 to 6.1% year on year.

South Africa has reported growth of 8.8% which, although high, has fallen from the double digits of the past five years.

Liam Bailey, Head of Residential Research at Knight Frank, said: ‘Bulgaria continues to confound market fears of oversupply and has so far proved immune to the deceleration seen in much of the continent. Iceland is another surprisingly strong performer with growth of 19.1%.

‘The Baltic region remains in the doldrums, noticeably Latvia and Estonia. Difficult economic conditions, evident in high rates of national debt, are partially to blame for the Baltic woes. The US also continues to experience difficulties, while the far-eastern cities of Hong Kong and Singapore are bright spots on the residential investment horizon.’

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