Hong Kong home buyers make market world's most buoyant

In Hong Kong, prospective homeowners are now being asked to find bigger down payments. Photo / Thinkstock

House prices in Hong Kong have risen at the fastest pace of any country in the world over the 12 months to March.

Despite cooling measures introduced by the Hong Kong Government since February 2013, prices rose by 19 per cent over the period due to a chronic shortage of homes.

Property values in Turkey accelerated by 18.6 per cent, the second biggest climber in the ranking, followed by Ireland where house prices grew 16.8 per cent. Luxembourg and Estonia completed the top five, the new Knight Frank Global House Prices Index showed.

In Hong Kong, prospective homeowners are now being asked to find bigger down payments - 40 per cent of the price - in order to buy.

"The luxury end of the Hong Kong market has already started to cool with a more modest house rise of 5 per cent," said Kate Everett-Allen, author of the report and residential research analyst at Knight Frank.

"However, a lack of supply along with the popularity of smaller apartments is behind the acceleration in the mainstream market."

The report examined 56 countries with a sizeable property market and for which reliable house price data is available.

Several factors were driving growth in the top-performing countries, Everett-Allen said.

"Some countries are coming back from a very low base following the global financial crisis, such as Ireland and Estonia. However, the top 10 also includes some emerging economies whose growing strength is reflected in their housing markets, such as Turkey and Colombia."

International demand and low interest rates have boosted house sales and prices in New Zealand and Australia, meaning that Australasia was the top-performing region across the world with house price growth of 8.2 per cent last year.

Cyprus, Greece, France and Italy were among the 10 worst-performing countries. Overall global house prices increased by 0.3 per cent on average.