The Q3 2010 growth rate is up substantially on the Q3 2009 figure of -6.2% when European markets were delivering very negative results.
However the rate is down on the 4.3% hit in Q2 this year.
The critical driver of this weaker recent performance is the number of countries tipping back into negative growth in the most recent quarter; 14, mainly European countries saw negative growth in Q3 after they had experienced several quarters of rising prices.
Whereas 67% of all countries saw positive annual growth, only 46% experienced growth in the most recent quarter.
Knight Frank says there is a growing gap between the less debt-afflicted European economies of Austria, France and Finland, ranked 8, 9 and 12 and their neighbours to the south and west of the continent, with Greece, Spain and Ireland ranking 38, 41 and 48 respectively.
Liam Bailey, head of residential research, Knight Frank, says: “There is a positive story to take from the latest results of the Knight Frank Global House Price Index. For the first time since late 2008 prices are rising in each of our six world regions, Asia-Pacific 9.9%, Middle East 5.1%, North America 4.2%, South America 3.5%, Africa 3.0% and Europe 0.8%.
“At the same time prices are rising in 67% of the 48 countries we have reported on this quarter, on an annual basis.
“Unfortunately these upbeat headlines do not tell the full story. Digging into the data we can see that there are still considerable issues playing out across the global markets. While a majority of countries are reporting positive annual growth, 56% saw prices fall in Q3 this year.
“There is growing evidence that the global housing market recovery, which began in early 2009 following the desperate conditions in 2007 and 2008, may just be beginning to run out of steam. Nearly 30% of countries which had experienced strengthening conditions in 2010 saw quarterly price growth turn negative in Q3 2010.
’Led by European markets the list includes: Greece, Iceland, Netherlands, Norway, Portugal, Slovenia and the UK. Outside of Europe the list also extends to cover: China, Canada, Columbia, Dubai, New Zealand, South Africa and Taiwan.
“The average performance of the European economies has improved but the picture reported for individual European countries varies dramatically, with annual growth ranging from 26.1% in Latvia to -13.9% in Lithuania and -14.8% in Ireland.”