Growth was led by Asia-Pacific, up 7.5%, the Middle East, up 5.3%, and South America, up 3.8%, but overall prices were down from the 3.1% recorded in the third quarter of the year.
The weakest region was North America which saw no change in values in the previous 12 month period, the index also shows.
The fastest risers in terms of countries were Hong Kong, up 20.1%, where the government is fighting to pull speculative price growth under control, followed by Latvia, up 16.9%, which is bouncing back from an incredible 70% fall in prices during the credit crunch and Israel, up 16.2%, which is still benefitting from considerable inward investment from overseas investors.
According to Liam Bailey, head of Residential Research at Knight Frank, there are relatively benign conditions, with average annual price growth across the world at a modest level but the average hides big regional and country level differences.
‘More concerning is the fact that this annual figure hides the fact that a growing number of countries are seeing negative quarterly price movements,’ explained Bailey.
His analysis shows that in the second quarter 2010 the proportion of countries in the index recording negative quarterly growth was less than a third at 31%, but in the third quarter it was 35%, and in the fourth quarter this rose to 41%.
‘Across an increasing number of European countries and also in the US markets were weaker in the second half of 2010, following a brief revival in the previous 12 months,’ said Bailey.
'This trend is being reinforced by weaker results from Asia-Pacific, with India, Taiwan and Japan all recording negative price growth in the second half of 2010. The key trend at play in the global market is the unwinding of the stimulus packages put forward in 2009 in Europe, North America and Asia-Pacific,’ he explained.
'The impact of hot money created by quantitative easing may be dissipating, especially in Asia, where the 30%, 40%, 50% and even higher annual rates of growth, which were common in some Chinese and Indian cities a year ago, have now cooled considerably.
‘In Europe and the US, by contrast, the last vestige of the stimulus, namely ultra-low interest rates are regarded as critical to the ongoing security of the market. As an example, discussions surrounding an impending rise in the UK rate from 0.5% to 0.75% are enough to cause panic among housing market commentators,’ he added.
He believes that it looks increasingly likely that Asian markets will escape a crash in prices, but in many of the previously hot markets, price falls later this year seems a realistic assumption.
‘Across Europe and the US the lack of bank lending is likely to extend the recent period of price reversals. In summary, outside of the luxury markets in the global city hubs, it is difficult to see what could bring about a rapid improvement in the housing markets of the developed economies,’ he concluded.
