Australia named one of world's best property markets

Credit:NineMSN

The Australian property market has been named as one of the world's best performing on the back of a 20 percent rise in prices in the last year.

The stellar growth in property values was driven by a combination of a 40 year low in interest rates, the increased first home buyer’s grant and population growth, according to a survey of 47 countries by international real estate agent Knight Frank. The survey ranks Australia as the world’s fourth best for price growth.

"With interest rates now rising, the government withdrawing stimulus and the supply response picking up, we expect house prices to slow over the next six to nine months," Liam Bailey, head of residential research at Knight Frank said.

China was the top performing country with house prices gaining 68 percent in the year to March 2010 with Hong Kong and Singapore taking second and third places respectively.

The entire Asia Pacific region was the biggest grower globally with house prices increasing by 17.8 percent.

Europe didn’t fare so well, dominating the bottom half of the table. Estonia dropped by 40.3 percent in the year to March 2010 with the Ukraine and Lithuania being other notable losers.

House prices in the United Kingdom rose by a less than impressive 8.8 percent for the same period.

However, Scandinavian countries did experience some growth.

"In Europe a positive story has been provided by the Scandinavian countries of Norway, Sweden and Finland. "Here annual growth has hit double digits as housing markets, less beset by currency weaknesses, and debt crisis than many of their European neighbours, has allowed supply shortages to fuel growth once more," Mr Bailey said.

Knight Frank’s study was based on the Australian Bureau of Statistics' House Price Index, which critics have claimed overstates property price growth.