Northern europe's markets perform best as global growth slows

Of the 40 countries monitored by the Global Property Guide, those in Northern European saw the highest house price rises in 2006 – with Estonia a clear leader.

The stag weekend favorite saw a massive 54% increase in house prices last year (slightly down on the 54% in 2005 but up on the 25% recorded in 2004). This was followed by Denmark (up 23%), Norway (14%) and Ireland (13%). Sweden, UK, and Finland as did well.

Parts of Southern and Central Europe also did well - with French house prices rising by 12.5%, Spain’s by 10%, and by 6.6% in Italy – but rises were fairly subdued in the most part. For example, 2.9% in Switzerland and Luxembourg, 2.8% in Germany and 2.2% in Poland. There were even some falls, with Portugal seeing a decline of -0.4% and -1.2% in Austria (house prices in Vienna rose by 6.8% compared to 8% in 2005).

Immigration favorites outside Europe experienced strong property price increases last year, such as Canada (11%), New Zealand (10%), the US (8%) and Australia (6.5%). South Africa wasn’t able to match the 33% recorded in 2004, but managed average house price rises of 12.7%.

The highest rises in Asia were seen in the Philippines (up 11.6%) and Indonesia’s house prices rose 8.76% (although, based on high inflation, at 13%, Indonesian house prices actually fell in real terms). Singapore saw its highest ever increase since 2000, at 7.6% year on year, while Malaysia and Taiwan saw only marginal price increases - of 1.4% and 1.1%, respectively. The recent military coup, and its impact on the overall economy, led to price falls of 1% in Thailand.

While more countries saw rises than falls in 2006, the pace of house price growth has slowed, according to the report. The most notable slowdowns (where the price rise rate dropped by more than 5%) were Poland (6.6% down on previous rate of house price rise), US (5.6%) and New Zealand (5.02%). Much of this is attributed to interest rate rises and declining affordability.

Source: Overseas Property Professional