ESTABLISHED IN 2006, the Knight Frank Global House Price Index tracks the performance of fifty-one of the world’s mainstream housing markets. The index is compiled on a quarterly basis using official government statistics or central bank data where available.
The latest issue, for the third quarter of 2011, showed zero growth over the three months to September. This was the index’s weakest performance since the second quarter of 2009 and raises fears that it could enter negative territory by the end of the year.
According to Knight Frank the boom conditions experienced between 2004 and 2007, when global housing markets recorded double-digit annual price growth for 16 consecutive quarters, are a distant memory.
Perhaps not surprisingly, Ireland experienced the largest annual fall in property prices with a drop of 14.3%. Amongst other EU countries, prices in Cyprus have fallen by 6.6% and those in Bulgaria by 6.1%.
Looking forward, Knight Frank believes that house prices are likely to show little improvement in the final quarter of 2011 given that much of the unravelling of the eurozone sovereign debt crisis took place post-September and has yet to be reflected in the index results.
Another factor that has yet to be reflected in prices in Cyprus is the impact of the explosion at the Evangelos Florakis Naval Base at Mari, which killed 13 people and devastated the Vasilikos Power Station.
Frank Knight – Global House Price Index (Q3 2011)