Estonia becomes the world's housing hotspot

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The Independent Online

Housing markets across the world have gone through a slowdown over the past year that has seen fringe countries overtake their bigger neighbours in the global league table, new figures showed today.

Average annual global house price inflation had fallen to 6.1 per cent at the end of March from a peak of almost 11 per cent in 2004.

Markets that led the boom in the early years of the decade, such as the UK, Spain, the US and Hong Kong, have all seen a slowdown in growth over the past year. In contrast, previously overlooked markets in eastern Europe and the southern hemisphere have leapt to the top of the scale, according to the estate agents Knight Frank International.

"The most notable trend is that house price growth is slowing across the globe," said Liam Bailey, its head of residential research.

"The early boom in house prices was led by the UK and Ireland but as the 2000s progressed, more and more countries saw house prices rise strongly."

The sharpest reversal in fortunes was experienced in Hong Kong, where price inflation fell from 23 per cent a year ago to a fall of almost 7 per cent, taking it from 4th to bottom out of the 29 countries surveyed.

UK house price inflation halved from 10 per cent to just over 5 per cent, taking it down two places in the table to 15th. Spain, the US, France, and Italy also saw a slowdown.

This left Estonia top of the table with annual growth of 17 per cent in the year to March, a similar finding to a recent survey of European markets.

Denmark was second (16.1 per cent), followed by New Zealand (13.5 per cent), Bulgaria (12.5 per cent) and South Africa (12.1 per cent). A year ago, four countries had inflation above 20 per cent, of which two were in excess of 30 per cent.

"The process of levelling up in eastern Europe will carry on apace over the next five years with average prices in most states coming close to the EU average," Mr Bailey said.

Meanwhile, the Council of Mortgage Lenders forecast that total UK mortgage borrowing would pass the £1 trillion mark early next month. Michael Coogan, its director general, said: "Although it is a milestone, it will perhaps soon be forgotten as home ownership and mortgage lending continue to grow further."

Mr Bailey said Knight Frank forecast a continued slowdown in global house price growth over the next year.

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