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Global house prices suffer severe slump


From Dublin to Tokyo, house prices have slumped in the past year as the credit crunch has restricted lending and stunted growth in the biggest economies, new figures have shown.

The world's three biggest financial powerhouses, the US, Japan and Germany, have all experienced negative or zero growth in property prices in the 12 months to March 31, according to the latest Global House Price Index from the estate agent Knight Frank.

The once booming Baltic states of Latvia and Estonia - where many Britons have bought holiday homes - suffered the most, crashing 20 and 10 per cent respectively to the bottom of the table of 33 nations.

In western Europe, Irish homeowners experienced the sharpest downturn, losing 8.8 per cent of the value of their homes, while in Germany prices fell by 5.2 per cent. In Japan, prices fell by 0.7 per cent, while the US, where the Treasury has pumped in billions of dollars to revive the economy, experienced zero house price growth.

Britain's runaway housing boom slowed to an annual rise of 1.1 per cent, though new figures from the Nationwide Building Society last week revealed they had slumped 2.5 per cent in May, the fastest fall in prices since the housing recession of the 1990s.

Few major economies escaped the global housing slowdown, with France, Hungary, Austria, Lithuania, Switzerland, Poland, New Zealand, Israel and Denmark all recording annual rises of 3 per cent or less. Some burgeoning economies have bucked the trend, though, mostly in Asia; Singapore was up 29.9 per cent, Hong Kong 28 per cent and China 11 per cent. Iceland and Australia also did well.

The global index is based on national statistics or figures from a respected national organisation.