Property price increases overseas slowing down

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by Kay Murchie

According to Frank Knight, the international estate agent, property prices overseas are increasing by 7.8% annually to the second quarter of 2007.

This figure shows a 1.8% decline, from 9.6% since the same period last year. The tightening of lending criteria for mortgages, particularly across Europe in 2006 and rising interest rates in many countries are thought to be responsible for the decline in house prices. Frank Knight added that it is also partly due to a correction in unsustainable house price increases in Europe.

For example, Latvia has experienced prices slowing down, its capital, Riga, has been hit hard by the implementation of new stamp duty regulations designed to control speculative property purchases.

Furthermore, the market in the US has fallen following the sub-prime mortgage market chaos. Annual growth in the US property market overall was just 3.2% in the second quarter of 2007 – the lowest for 10 years. However, the Federal Reserve has implemented a 0.5% cut in interest rates so it is anticipated that further falls will be prevented.

Growth also appears to be slowing in European economies. In Ireland, annual increases were just 0.9% following a period of higher growth. A decline in average price increases was also noted in the Netherlands, Denmark, Sweden, Switzerland and France.

The only country that appears to have escaped relatively unscathed with prices up 5% on the previous year is Spain.