28/09/2007

European housing market growth slows

Even before the effect of the Northern Rock crisis and the introduction of HIPS on the UK property market can be assessed, the latest Knight Frank Global Price Index confirms that the growth in residential property prices around the world are slowing down. In the second quarter of 2007, global prices rose 7.8% compared to 9.6% in the same period in 2006. Key factors are seen as rising interest rates and a tightening of lending criteria in many European countries. Latvia still tops the list of year-on-year price growth, despite a slowdown in growth. High interest rates across the Eurozone have put a break on Ireland’s growth at just 0.9% higher than the year earlier. However, property hotspot Dublin significantly exceeded growth in the rest of the country. The price boom in Spain appears to be over with prices moderating but nationally prices for quarter 2 were still 5% higher than last year. Denmark, France, the Netherlands and Switzerland have all seen rates of property price inflation slow and the German residential market remains in the doldrums according to the report. Bucking the trend is Bulgaria with strong growth and Estonia has also seen higher annual prices. “The UK has also seen continued strong price growth, fundamentally driven by an undersupply of property, and until recently, the increased availability of more flexible mortgage products” Says Liam Bail head of Residential Research at Knight Frank.

Outside Europe Singapore has seen spectacular improvement with house price inflation exceeding 20% and prices have continued to rise in South Africa, New Zealand and Australia with only the US and Japan lagging behind. The US crisis in the sub-prime market has resulted in the lowest rate of growth in the US since 1997.

For the full reports visit www.knightfrank.com/research.

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