Australia’s property market, on the back of a 20-percent price increase in 2009, has been named as one of the world’s best performing property markets.
According to a survey of 47 countries conducted by Knight Frank, the surprising growth in real estate values was largely driven by a combination of a 40-year low in interest rates, population growth and the increase in first-time homebuyer’s grant. These factors ranked Australia as the world’s fourth best for price growth.
"With interest rates now rising, the government withdrawing stimulus and the supply response picking up, we expect house prices to slow over the next six to nine months," said Liam Bailey, Knight Frank’s head of residential research.
The best performing country was China, with home price increases hitting 68 percent in the year to March, followed by Hong Kong and Singapore taking the second and third spots, respectively.
The whole Asia-Pacific region was the biggest gainer globally with house prices rising by 17.8 percent.
Europe did not fare so well, dominating the bottom half of the record. Estonia slipped 40.3 percent in the year to March. Ukraine and Lithuania were among the notable losers.
Home prices in the UK increased less than 8.8 percent over the same period, while Scandinavian countries experienced slight growth.
"In Europe a positive story has been provided by the Scandinavian countries of Norway, Sweden and Finland. Here annual growth has hit double digits as housing markets, less beset by currency weaknesses, and debt crisis than many of their European neighbours, has allowed supply shortages to fuel growth once more," said Mr. Bailey.