Global property markets react to credit crisis

Permalink: Global property markets react to credit crisis
by Gill Montia

Knight Frank’s Global House Price Index for the second quarter of 2008 shows the widening impact of the credit crisis, with property inflation and prices falling back across Europe and into Asia.

Global house price inflation continued to slow, with annual growth standing at 4.8% during the three months to the end of June, down from 6.1% in the previous quarter.

Latvia showed the steepest drop in values with residential property prices 24.1% below the same time last year.

According to the index, prices are also falling rapidly in Lithuania, Denmark, New Zealand, Malta, Germany, Ireland, Estonia, the UK and the US.

In addition, a number of countries are experiencing a rapid deceleration in price growth.

In South Africa the rate of house price inflation has plummeted from 15.5% this time last year to 3.8%.

In France, Spain and Greece property price inflation is now below 3.2%.

While the problems of the Spanish residential property market have not yet fed into house price statistics, sales in the country dropped by 34.2% in May and 29.6% in June and Knight Frank’s head of international research, Nick Barnes, believes price falls could be imminent.

Meanwhile Russia has seen growth drop back to 26.5%, down from 53.7% in the second quarter of 2007.

In Europe, Bulgaria topped the growth index for the fourth consecutive year, with inflation running at 32.2% over the 12 months to the end June.

Slovakia, Russia, the Czech Republic and Hong Kong all recorded annual growth of over 25%.