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Global Property Prices Turning Upward

Real estate markets worldwide are stabilizing and showing signs of a tentative recovery, according to a newly released report from London-based global property consultancy Knight Frank. The quarterly Knight Frank Global House Price Index shows property values increasing in almost half of 32 countries surveyed during the second quarter of this year.

“Significantly, quarterly price falls accelerated in only 22% of the locations and did not exceed 10% in any country,” says Liam Bailey, head of residential research for Knight Frank. “This compares with double-digit falls in a number of locations during the first quarter.”

Some of the strongest signs of recovery are coming from the Nordic countries, with prices up over the previous quarter by 5.3% in Norway, 3.9% in Finland, and 3.6% in Sweden. But countries as diverse as Australia, Israel, and the Netherlands also are posting solid gains. In some places, demand is being spurred by historically low borrowing costs and home buyer tax incentives. Swedens central bank, for example, has slashed the prime interest rate from 3.75% a year ago to only 0.25% today, so banks there are now offering home loans at interest rates as low as 1.5%.

Interest rate reductions by the Bank of England, coupled with a relatively tight supply of housing in Britain, has reignited the market there as well, sending prices up 1.1% in the second quarter after five consecutive quarters of price drops.

The market is even starting to rebound in the U.S., where the subprime mortgage crisis originally began. U.S. home prices rose 1.3% in the second quarter, following declines of 7% in each of the previous two quarters. Even hard-hit regions such as California are starting to recover.

via Global Property Prices Turning Upward – BusinessWeek.

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