House price growth is rapidly decelerating in the UK, New Zealand, Ireland, Australia, and South Africa and elsewhere. 2005 saw dramatic slowdowns for exactly those countries which had experienced the longest periods of rapid price growth.

It has been an extraordinary decade. House prices in Ireland rose 253% over the ten year period 1995-2005, UK house prices by 207.7%, Spanish house prices by 178%, Australian prices by 122.8%, and Dutch prices by 119.6%.

Yet UK house price growth is now down to 6% p.a., after averaging 15% p.a. during the past five years. Australian first quarter 2005 house price growth was a marginal 0.4%, down from 2.7% in 2004, after average rises of 12.6% during the previous five years. In some cities such as Sydney, prices are already falling. The slowdown has also affected Ireland and the Netherlands.

Hong Kong and South Africa, those sudden new 'shooting stars' of the house price world, also appear to be cooling. After South Africa's house prices had surged 33% in 2004, this year its house price growth moderated to a mere 19%. Hong Kong's house price growth has also slowed from 2004's spectacular 27.4%, to a more placid 19%.

Other housing markets that have also cooled are Spain's 17.5% 2004 rises falling to 15.5%, Sweden from 10.03% to 7.4% growth, and China from 5.4% growth to just 1.9% Of the major countries, the housing market of New Zealand and France are still accelerating, although quite modest. Rather surprising is the continued strong growth of US house prices (see related box).

While house markets in many countries appear to be cooling, other markets have just taken off recently. Singapore has begun a recovery from the price declines that started with the Asian Crisis of 1997. From June 2000 to 2005, house prices have declined by 18%. This year's growth, however, is at 2.3% p.a., quite modest but still better. The recovery is also observed in other countries affected by the Asian Crisis such as the Philippines, Malaysia, and Thailand.

Other countries are still in a slump. Japan experienced a 5.4% land price contraction in the year to Q1 2005. South Korea's house price index fell by 1.3% p.a. during the first quarter of 2005. Germany's house prices are still depressed, with prices at the same level as a decade ago.