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Global house price crunch bites

Tuesday, 25 November 2008 4:31 PM

Over half the countries in the world suffered house price falls over the last three months and a third are now recording annual house price drops.

The Knight Frank global house price index - covering 45 nations - shows average prices dropped 3.8 per cent over the last year.

Latvia was at the bottom on the house price league with prices down 24.1 per cent, below the US (down 16.3 per cent), Estonia (down 16 per cent) and the UK (down 10.2 per cent).

Highest growth was recorded in Slovakia (up 31.2 per cent), Russia (up 26.9 per cent) and Bulgaria (up 26.8 per cent).

Nicholas Barnes, head of international research at estate agents Knight Frank, said: "It is now clear that no part of the world is likely to escape the credit crunch as property prices start to fall in more and more parts of the globe.

"Even though strong growth in 2007 means two thirds of the index is still showing an annual increase, prices in more than half of the countries fell in the third quarter of this year.

"We expect that trend to continue with the vast majority of locations showing zero or negative quarterly growth by the end of the year."

While Russia and some Eastern Europe nations still performed reasonably well, there are signs that some of the strongest performers of previous quarters are starting to weaken.

However, Mr Barnes claimed the speed of falls offered hope.

"Although homeowners may beg to differ, the scale and speed of some of the falls is positive in a way because it means investors who are in a position to buy, are now sensing that some markets are offering relative value compared to pre-credit crunch conditions," he said.

"Against a backcloth of frustration with recent stock market performance and nagging doubts about segments of the banking sector, property appears to offer a relatively secure and tangible home for their money."

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