Many UK homeowners will be delighted with the near-9% house price growth notched up over the past year, but their counterparts in the Latvian capital of Riga really have something to smile about: prices are up 39% from 12 months ago.
Riga topped a new global house price league table published by the estate agency Knight Frank. Its turbo-charged performance put it well ahead of Bulgaria and Denmark, second and third on the list with annual price growth of 19% and 17.8% respectively. By contrast, the biggest loser was Hong Kong; a year ago Hong Kong was boasting annual price growth of 20%, but prices fell by 2.6% over the 12 months to September 30.
Only Germany managed a worse performance – prices there dropped by 3%. Liam Bailey, Knight Frank’s head of residential research, said: “Germany has been the poor man of Europe in housing terms for well over a decade, and any change in this position is still some way off.” Mr Bailey analysed the property markets in 32 countries. Japan, Portugal and Hungary also saw prices fall.
Explaining Riga’s strong showing, Mr Bailey said: “Latvia has seen, and is forecast to see over the medium term, economic growth above the EU average. Wage inflation, growing prosperity and access to less constrained mortgage finance have all contributed to rapidly rising prices.”
It is a similar picture in Bulgaria, where the market has benefited from an influx of Britons buying second homes.
All eyes have been on the US housing market lately, and the new data provides the latest evidence of a sharp slowdown, showing that the annual rate of growth has more than halved to 5.7%.
Knight Frank also found that the appetite for second homes continues unabated, helped by the relentless march of the low-cost airlines. “Looking ahead, we are upbeat about prospects in 2007,” said Mr Bailey.