A world league table of property markets has shown values are falling fastest in southern Europe, as a recovery gathered pace in major markets across the globe.
Prices in Greece, where the economy has been crippled by the weight of government debt and by austerity measures, fell by 11.8pc in the year to the end of March, according to estate agency Knight Frank.
The rate of decline worsened from 9.8pc a year earlier.
Other countries in the so-called PIIGS countries – Spain (-7.9pc), Portugal (-6.9pc), Italy (-4.1pc) and Ireland (-3pc) – were also among the weakest markets (see the table below).
The fall in the value of Spanish propery was marginally worse than the year before when it was 7.3pc.
Ireland’s fall, however, was a vast improvment from a 16pc plunge the year before.
Unemployment has soared in many of the eurozone economies while wages have stagnated or fallen in real terms, putting pressure on property valuations. In Spain, further ill-effects have been imposed by changes in tax rules, according to experts.
A new law in April required residents to declare any overseas asset worth more than €50,000, sparking fears that their may be a future Cyprus-style money grab.
However, Knight Frank’s experts have said a decision by the Spanish government to grant residency to non-EU nationals who buy property in the country costing more than €500,000 would offer some support.
The rule is expected to be enacted into law in coming months.
Global property prices changes
Hong Kong, in contrast to Europe, posted gains of 28pc, followed by China at 23.8pc and Dubai at 21.1pc.
Thirty five of the 55 housing markets analysed, or 63pc, registered gains.
South Africa was also singled out by report author Kate Everett-Allen as a strong performer, with prices up 11.3pc – a turnaround form a 3.2pc fall the year before.
She said: “South Africa’s momentum is linked to an increasingly wealthy middle class who are tapping into the rising confidence of the wider African continent, keen to get on the property ladder.”
A similar pattern of recovery was seen in the US. Values for the year were up 10.2pc after a 1.9pc fall the year before.
Last month, the Standard & Poor’s/Case-Shiller home price index showed the market was rising at its fastest level in seven years, fuelled by cheaper borrowing costs, rising consumer confidence and a shortage of properties to buy.
The recovery in the market has helped pull as many as 1.7m American households out of negative equity, which could help underpin further gains. Some economists have warned that rising mortgages rates in the US, which are influenced by the yield on US government bonds, could hamper the recovery. The average 15-year mortgage fixed rate in the US has risen above 3pc and is at its highest level since March 2012.
Prices in the UK, according to Knight Frank were up by just 0.2pc over the year – the same as the previous year. Demand has been propped up by various Government-backed schemes. The Funding for Lending Scheme, launched last summer, has helped push the best mortgage rates down to just 1.7pc with experts predicting a drop below 1.5pc in coming months.
Chancellor George Osborne’s Help to Buy scheme, which offers interest-free loans and guarantees from taxpayers to buyers, has also increased buyer interest, according to estate agents.
Which are the cheapest and most expensive markets?
Last month a study by the OECD, which compared prices with local wages and rents, suggested Belgium, Norway and Canada were the most expensive markets compared with their own long-term averages, followed by New Zealand, France and Australia (see OECD the chart below).
British house prices were estimated as being 31pc too high compared to rents and 21pc over-priced against incomes.
For cheap property, the research pointed to Portugal, Ireland, Germany and Japan.
The former two saw huge price falls during the financial crisis. The excesses of the property bubble that burst in late 2007 largely passed over Germany, and Japan’s market has been in an on-off slide since a banking crisis in Tokyo in 1990.
The OECD study echoes research published last month by The Economist. The news magazine produces its own study twice a year with the latest suggesting the most over-valued markets were Hong Kong – 81pc too high against rents – Canada and Singapore.