The top ten of Knight Frank's Global House Price Index for the last quarter of 2006 is dominated by northern European housing markets...

Knight Frank release their Global House Price Index today detailing the growth trends of 33 housing markets around the world.  What's striking is that the Top 10 is dominated by Northern European markets.

Keeping its top slot for another consecutive month is Latvia (Riga) with a staggering year-on-year price growth of 66.6% in the fourth quarter of 2006.  Next came Poland (33.0%), Denmark (22.0%), Norway (16.4%) and Lithuania/Vilnius (9.0%), making the top five entirely dominated by northern European markets.  Other northern European markets in the Top Ten were Sweden (10.5%) and Estonia/Tallinn (21.4%) backing up in 9th and 10th places respectively.

Slower global house price growth hides local opportunities

Overall, Knight Frank have identified two noticeable trends at work across global housing markets:

Firstly, price growth is slowly but surely beginning to decline in most locations globally.  The impact of lower interest rates has led to sharply higher prices across Europe, Asia and the Americas.  This upward trend in asset prices is moving to a close as interest rates either remain level or begin to rise.

Secondly the emerging economies are still dominating the top of the growth table - with the recent EU accession states being classic examples.  Growth in prices here reflects wider mortgage market reform and rising wealth in expanding economies.

Liam Bailey, Head of Knight Frank Residential Research, commented, “Too many people look to invest in the top growth location, (like Latvia) assuming that high growth will continue.  It might be a more interesting and perhaps rewarding strategy to look at the bottom of the table and think which of these countries will see the next upturn.

Bailey continued, “For various reasons Germany has underperformed as a nation in housing market terms for a decade.  We think investors could do well to look behind the headline figure and look more closely at some of the German sub-markets.”

Knight Frank Global House Price Index
Location	2005 Q4	2006 Q4	2005 Q4 Rank	2006 Q4 Rank	Position change between Q4 2005 and Q4 2006	Position change from 2006 Q3 to 2006 Q4
Latvia (Riga)	61.7%	66.6%	1	1	0	0
Poland	NA	33.0%	NA	2	NA	NA
Denmark	21.3%	22.0%	4	3	1	0
Norway	7.5%	16.4%	20	4	16	2
Lithuania (Vilnius)	9.0%	13.3%	16	5	11	-1
Bulgaria	21.6%	13.0%	2	6	-4	-4
South Africa	17.8%	13.0%	5	7	-2	1
Ireland	9.8%	12.0%	14	8	6	-3
Sweden	10.5%	11.0%	12	9	3	4
Estonia (Tallinn)	21.4%	10.4%	3	10	-7	0
Singapore	3.9%	9.9%	23	11	12	7
Spain	12.9%	9.0%	10	12	-2	0
France	14.2%	9.0%	8	13	-5	1
Canada	10.5%	8.4%	13	14	-1	-3
Australia	2.3%	8.3%	26	15	11	2
Belgium	15.9%	7.6%	6	16	-10	-9
UK	3.2%	7.5%	25	17	8	-1
Greece	12.8%	7.0%	11	18	-7	-9
Serbia (Belgrade)	-12.5%	6.5%	32	19	13	8
New Zealand	15.2%	6.2%	7	20	-13	-5
China	5.1%	5.5%	22	21	1	0
Netherlands	5.5%	5.2%	21	22	-1	2
Finland	8.4%	5.1%	17	23	-6	-3
Indonesia	9.5%	4.4%	15	24	-9	-5
US	13.3%	4.2%	9	25	-16	-3
Italy	8.1%	4.0%	19	26	-7	-1
Austria	1.8%	2.7%	27	27	0	-4
Switzerland	1.3%	1.6%	28	28	0	-2
Hungary	-1.2%	1.3%	30	29	1	-1
Portugal	3.5%	0.6%	24	30	-6	-1
Hong Kong	8.1%	0.4%	18	31	-13	0
Japan	-4.5%	-1.6%	31	32	-1	-2
Germany	0.1%	-3.2%	29	33	-4	-1